Seoul: SK hynix Inc. has unveiled a significant move to bolster shareholder value through a massive share buyback initiative. The South Korean technology giant announced on Wednesday its plan to repurchase 24.07 million common shares, valued at 40 trillion won (approximately US$28.7 billion), as part of its commitment to enhancing shareholder returns.
According to Yonhap News Agency, the share buyback aims to elevate shareholder value by canceling treasury stocks. SK hynix has committed to acquiring these shares from Thursday until November 19, with a plan to cancel all acquired shares post-buyback. This cancellation stands as the largest of its kind among listed companies in South Korea.
The decision for the buyback comes as the leading memory chipmaker assessed its stock to be undervalued compared to its intrinsic value. The company has also announced intentions to allocate at least 50 percent of its free cash flow, generated from 2025 to 2027, towards shareholder returns.
This move is part of an early implementation of SK hynix's previously announced shareholder return policy. In November of last year, the company declared plans to return up to 50 percent of its cumulative free cash flow generated over the three-year period from 2025 to 2027. A company official, who chose to remain anonymous, mentioned that during the policy period, SK hynix plans to explore additional shareholder returns through a combination of share buybacks, cancellations, and dividends, considering cash flow, market conditions, and distributable profits.
Despite the company's shares nearly tripling since the start of the year, recent market volatility has led to fluctuations. On Wednesday, SK hynix's stock saw a significant drop of 9.75 percent, closing at 1.5 million won.