Naver to cancel $305 mil. treasury stocks to pump up share price

Naver's data center in Sejong / Courtesy of Naver

Naver will buy back 400 billion won ($305.7 million) of treasury stocks and cancel them by the end of this year, in order to boost its share price and improve shareholder value, the internet service giant said Monday.

According to the company, it will repurchase approximately 2.35 million shares, equivalent to about 1.5 percent of its total issued shares, between Oct. 2 and Dec. 28, with the intention of canceling all of them by Dec. 31.

Naver said its board made the decision because the company’s stock price has been declining significantly throughout this year and acknowledged the necessity for a stronger measure to enhance shareholder value.

Since recording its highest price of 465,000 won on July 26, 2021, Naver has been mired in a downward spiral, due largely to lingering concerns on its sustainable growth. It ended at 170,400 won on Friday, which is down 15.4 percent from 201,500 won a year earlier.

The company said it will finance this program by using dividends paid by A Holdings, a 50:50 joint venture between Naver and SoftBank which controls LY Corp., operator of the Line messenger app, in Japan.

Naver said A Holdings lowered its stake in LY Corp. from 63.56 percent to 62.5 percent, after it participated in LY Corp.’s treasury stock buyback which had been aimed at complying with Japan's new financial regulations.

Naver said it secured 800 billion won from a special dividend from this transaction and a regular dividend paid by A Holdings, and will use half of this for improving its share price in Korea.

Naver said the latest buyback program is separate from its shareholder value improvement program announced in May last year.

At the time, Naver promised to pay out cash dividends amounting to 15 percent to 30 percent of its average free cash flow over two years and cancel 1 percent of its treasury shares annually for three years. Following this plan, Naver paid 119 billion won in dividends in April this year and canceled 1 percent of its treasury stocks in August.