Korea’s Top 5 Business Groups Acquire or Cancel 24 Tril. Won Worth of Treasury Stock

South Korean conglomerates have acquired or canceled treasury shares one after another to improve shareholder value.
 

According to investment banking (IB) industry sources on Dec. 6, the affiliates of the nation’s top five business groups have acquired or canceled 24 trillion won (US$21.4 billion) worth of treasury shares since last year.

Samsung Group affiliates have acquired or canceled 19 trillion won (US$16.94 billion) worth of treasury stock since last year. Samsung Electronics Co. canceled treasury stock worth 9.22 trillion won (US$8.22 billion) last year and 9.08 trillion won (US$8.09 billion) this year. Samsung Card Co. bought in 58 billion won (US$51.72 million) worth of treasury shares.

The SK Group acquired or canceled 3 trillion won (US$2.67 billion) worth of treasury stock over the same period. The group’s main affiliates SK Innovation Co. and SK Hynix Inc. purchased treasury stock worth 1 trillion won (US$891.66 million) and 1.73 trillion won (US$1.55 billion), respectively. SK Networks Co. and SK Materials Co. also bought in 53 billion won (US$47.26 million) and 94 billion won (US$83.82 million) worth of treasury stock, respectively. SK Discovery Co., which turned into an intermediate holding company last year, canceled 59 billion won (US$52.61 million) worth of its treasury shares.
 

The Hyundai Motor Group acquired or canceled treasury stock worth 635 billion won (US$566.21 million) last year and 559 billion won (US$498.44 million) this year, respectively. In addition, Lotte Holdings Co., the holding company of the Lotte Grouo, canceled 661 billion won (US$589.39 million) worth of treasury stock.

Following the introduction of the stewardship code last year, shareholder activism has increased, forcing corporations to improve corporate governance and take steps to enhance shareholder value.

In particular, an increasing number of conglomerates have been making moves to raise shareholder value after Samsung Electronics announced the large-scale shareholder return plans last year. The Hyundai Motor Group also began to push for corporate governance reform, while the Lotte Group adopted a holding company system.