The proposed PHG buyback seems needlessly complicated. I'm worried that it's a complicated con to bilk investors out of their rightful property. Here is my reasoning: Philips is rich with cash from the polygram sale. This cash in a sense belongs to the investors. Giving the cash back to the investors is fine, but then to take 10% or so of their shares away claiming it's a buyback seems like robbery. If PHG wants to buy back shares, why not the doing it the traditional way and saving the investors all the headaches of buying once again back the 10% of the shares, the taxes etc.
While I like the PHG stock (I bought when the company was ready to go bankrupt 8 years ago or so), I am just wondering whether I will get the short end of the stick after the buyback. I am therefore considering dumping my stock soon. Any comments or words of reassurance?
I e-mailed the company from their web site regarding this. And to my amazement someone from PHG actually called me.
The bottom line is our % of ownership of the company does not change when the shares are exchanged because they are taking these shares out of circulation.
They detrmined this was the best way to get value to the shareholder because there are limitations on what European companies can do in this area. If you want a better explanation e-mail the company. After about four days they responded.
When PHG takes 10% of the shares out of circulation, does that mean that PHG now owns these shares (and can give them later to their top-managment as bonuses?) So, I am still confused: a) If PHG does not own the shares that were bough back either, why do it at all? Just increase the divident. b) If PHG now owns the shares, it looks like I have been robbed, or to say the least, I now have to buy back my shares to own the same fraction of the company with the cash that I just received.
In either case, the rational of the process escapes me, confuses me, and it does not look as buyback to me. Also, if it looks irrational, complicated and confusing, I fear the worst as far as PHG's motives are concerned. I am sure they have a good explanation.