Koninklijke Philips Electronics NV Message Board
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PHG buyback a con?
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.- 2 Replies to riverview5
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Of course they are screwing us. It's PHG, after
all.
They are buying back a percentage of their stock at a
price we wouldn't sell for, knowing that if they did a
normal market buyback or tender they would have to pay
more.
And we have to pay capital gains taxes
for the privilege.
In the US this would not
fly.
PHG. Got to admit it's getting worse, it's getting
worse all the time... -
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.
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