SK Hynix has decided to buy back and completely cancel 40 trillion won worth of its treasury shares to boost its stock price and enhance shareholder value. This marks the largest treasury stock cancellation in the history of South Korean listed companies.
On August 19, SK Hynix announced through a public disclosure that its board of directors approved the acquisition and cancellation of treasury shares.
The planned acquisition amount totals 40 trillion won, which is equivalent to approximately 24.07 million shares based on the closing price of 1,662,000 won the day before the board resolution. This represents about 3.3% of the total issued shares of 730,492,365. The buyback will commence on August 20 and is expected to be completed within three months, after which all shares will be canceled.
The decision to cancel treasury shares is based on the assessment that the current stock price is undervalued compared to the company's intrinsic value.
SK Hynix stated, "We are continuing to achieve record performance, driven by our leadership in the artificial intelligence (AI) memory market, and our cash generation capacity has significantly improved, with net cash reaching approximately 69 trillion won as of the end of the second quarter this year."
Additionally, the company plans to expand its three-year (2025-2027) shareholder return policy from the previous range of 'up to 50% of cumulative free cash flow (FCF)' to 'more than 50%.' This move fulfills a commitment made in November 2024 to consider early returns if FCF significantly increases before the policy period ends.
The methods of returning value to shareholders will include both treasury stock acquisition and cancellation, as well as cash dividends, with plans to review options for increasing dividends, including fixed and special dividends.
* This article has been translated by AI.
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