South Korea’s Samsung Electronics Co Ltd has announced a $2 billion share offer buyback plan, its first since 2007, after investor calls for higher returns against a backdrop of quickly declining profits.
The world’s largest smartphone producer will buy back 1.65 million common shares and 250,000 preferred shares to balance out its share price and boost value for shareholders, it said in an administrative documenting, its second-biggest buyback ever.
The buyback is the most recent by a major Korean company after similar activity earlier this month by Hyundai Motor Co and affiliate Kia Motors Corp, whose buyback arrangements were likewise aimed at improving shareholder value.
Samsung’s plan comes in the midst of mounting pressure for the tech giant to return more money to shareholders as it heads for its worst yearly profit in three years, dragged down by falling market share in its cell phone business. The move is additionally likely to appease shareholders after a year of declining shares.
Samsung shares are down 12.5% in 2014, having recovered from multi-year lows seen last month, compared with a 1.5% decline for the broader market
The company is also expected to increase dividend payouts this year to further boost investor sentiment, though Samsung has yet to specify plans.
The buyback plan comes ahead of Samsung’s annual personnel appointment announcement, which is expected in early December. Its poor mobile phone performance this year has led to speculation that major changes may be coming, including the potential dismissal of the company’s mobile division chief JK Shin. Samsung said it does not comment on rumours.
Earlier, Samsung Electronics said it will sell its stakes in Samsung Techwin Co Ltd and Samsung General Chemicals Co Ltd for 761 billion won ($687.98 million) as part of a broader Samsung Group divestment from defence and chemical arms.
Samsung Electronics held 66.95 trillion won in cash and equivalents at the end of the third quarter.