Samsung to Buy Back $2 Billion Worth of Shares

Samsung Electronics Co. said it would repurchase $2 billion worth of its shares, its first buyback in seven years, as it deploys a part of its hefty cash reserve to shore up its flagging share price.

In a regulatory filing after the close of trading Wednesday, Samsung said it was returning the cash to improve shareholder returns and stabilize its stock price, which is down 12% so far this year.

The buyback announcement comes after a number of high-profile stockholders and analysts have publicly called for improved shareholder returns. Samsung’s dividend yield, which measures a company’s annual dividend in relation to its share price, is around 1.2% — about half that of peers such as Intel Corp. INTC, +1.60% and Taiwan Semiconductor Manufacturing Co. 2330, +0.72% TSM, +1.18%

The South Korean technology giant said that the buyback will include 1.65 million common shares, worth 1.96 trillion Korean won ($1.8 billion), and 250,000 nonvoting preferred shares, valued at 230 billion won, based on Tuesday’s closing price. Samsung shares 005930, +5.75% SSNLF, -1.91% finished the day up 0.9% at 1,201,000 won ($1,080), before the announcement.

The buyback will take place over the next three months, but Samsung said it hasn’t decided whether to retire the repurchased shares or hold the stock in the company’s treasury. The company was also silent on the issue of its dividend.

Source: MarketWatch