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Koninklijke Philips N.V Message Board

  • the_ground_hog_and_the_fox the_ground_hog_and_the_fox Jan 7, 1999 9:14 AM Flag

    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

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    • 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

      • 2 Replies to riverview5
      • Of course they are screwing us. It's PHG, after

        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

        And we have to pay capital gains taxes
        for the privilege.

        In the US this would not

        PHG. Got to admit it's getting worse, it's getting
        worse all the time...

      • the_ground_hog_and_the_fox the_ground_hog_and_the_fox Jan 7, 1999 11:26 AM Flag

        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
        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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