SK Square Announces Share Buyback Plan to Boost Value of AI Chip Investment
2 Sources
2 Sources
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South Korea's AI chip investor announces plan for share buybacks
SEOUL (Reuters) - SK Square, the holding company of SK Hynix, a maker of artificial intelligence chips, on Thursday announced a plan to buy back shares and nominate an independent director as part of efforts to boost shareholder value. The plan came after London-based hedge fund Palliser Capital this year proposed changes to address the undervaluation of the company and South Korea's government has implemented a "Value-Up" programme to bolster stock prices. SK Square said it plans to cancel 100 billion won ($71.51 million) worth of shares that it had bought back in April, while planning to repurchase another 100 billion won worth of shares within the next three months and cancel those shares. It also announced other measures to boost the value of the company, which holds a 20% stake in SK Hynix, a South Korean firm that posted a record quarterly profit thanks to booming AI chip demand from customer Nvidia. SK Square's market value is less than half the $18 billion value of the stake it holds in SK Hynix. Palliser Capital acquired a 1% stake in the company this year, a person familiar with the matter told Reuters, adding that the two have had talks on enhancing shareholder returns. This year, the Korea Exchange, a securities exchange operator in the country, launched a new stock market index comprised of listed companies making an effort to raise market value, hoping to give companies an incentive to follow the government's initiative. (Reporting by Hyunjoo Jin and Jack Kim; additional reporting by Cynthia Kim; Editing by Ed Davies)
[2]
South Korea's AI chip investor announces plan for share buybacks
SEOUL, Nov 21 (Reuters) - SK Square (402340.KS), opens new tab, the holding company of SK Hynix (000660.KS), opens new tab, a maker of artificial intelligence chips, on Thursday announced a plan to buy back shares and nominate an independent director as part of efforts to boost shareholder value. The plan came after London-based hedge fund Palliser Capital this year proposed changes to address the undervaluation of the company and South Korea's government has implemented a "Value-Up" programme to bolster stock prices. SK Square said it plans to cancel 100 billion won ($71.51 million) worth of shares that it had bought back in April, while planning to repurchase another 100 billion won worth of shares within the next three months and cancel those shares. It also announced other measures to boost the value of the company, which holds a 20% stake in SK Hynix, a South Korean firm that posted a record quarterly profit thanks to booming AI chip demand from customer Nvidia. SK Square's market value is less than half the $18 billion value of the stake it holds in SK Hynix. Palliser Capital acquired a 1% stake in the company this year, a person familiar with the matter told Reuters, adding that the two have had talks on enhancing shareholder returns. This year, the Korea Exchange, a securities exchange operator in the country, launched a new stock market index comprised of listed companies making an effort to raise market value, hoping to give companies an incentive to follow the government's initiative. Reporting by Hyunjoo Jin and Jack Kim; additional reporting by Cynthia Kim Editing by Ed Davies Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Boards, Policy & RegulationCorporate Activism
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SK Square, the holding company of AI chip maker SK Hynix, unveils a share buyback plan and governance changes to address undervaluation concerns and align with South Korea's "Value-Up" program.
SK Square Unveils Share Buyback Plan
SK Square, the holding company of South Korean artificial intelligence (AI) chip maker SK Hynix, has announced a significant share buyback plan aimed at boosting shareholder value. The move comes in response to pressure from investors and aligns with the South Korean government's "Value-Up" program designed to bolster stock prices 12.
Key Elements of the Plan
The company's strategy includes several key components:
- Cancellation of previously repurchased shares worth 100 billion won ($71.51 million) from April.
- A new share repurchase program targeting an additional 100 billion won worth of shares within the next three months.
- Plans to cancel the newly repurchased shares.
- Nomination of an independent director to enhance corporate governance 12.
Addressing Undervaluation Concerns
SK Square's market value currently stands at less than half the $18 billion value of its 20% stake in SK Hynix. This discrepancy has drawn attention from investors, including London-based hedge fund Palliser Capital, which acquired a 1% stake in SK Square this year 12.
SK Hynix's AI Chip Success
The buyback plan comes on the heels of SK Hynix's record quarterly profit, driven by strong demand for AI chips from customers like Nvidia. This success in the AI chip market has highlighted the potential value locked within SK Square's holdings 12.
South Korea's "Value-Up" Initiative
The announcement aligns with broader efforts in South Korea to enhance shareholder value:
- The government has implemented a "Value-Up" program to boost stock prices.
- The Korea Exchange launched a new stock market index featuring companies actively working to increase their market value.
- These initiatives aim to incentivize companies to focus on shareholder returns and market valuation 12.
Investor Relations and Market Response
SK Square's actions reflect ongoing dialogue with investors like Palliser Capital about enhancing shareholder returns. The company's proactive approach to addressing undervaluation concerns demonstrates its commitment to aligning with both investor expectations and government initiatives 12.
As the AI chip market continues to grow, SK Square's moves to unlock the value of its SK Hynix stake could have significant implications for investors and the broader technology sector in South Korea.
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