STMicroelectronics Announces Status of Common Share Repurchase Program
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Insights
STMicroelectronics' recent announcement of its share repurchase program indicates a strategic use of its capital. Repurchasing shares can be a signal to the market that the company believes its stock is undervalued. The buyback of 148,522 shares, representing 0.02% of issued capital, at an average price of EUR 39.3354 per share, reflects a direct investment back into the company. This action can lead to an earnings per share (EPS) boost, as there are fewer shares outstanding, which could be attractive to investors.
The expenditure of EUR 5,842,179.31 for this activity, while not a significant percentage of the company's market capitalization, still represents a substantial cash outflow. Investors should consider the impact of such buybacks on the company's balance sheet and liquidity position. On the one hand, it might suggest confidence from management in the company's financial health and future prospects. On the other hand, it reduces the cash available for other investments or debt reduction.
The stock market often reacts favorably to share repurchase announcements, as they can be perceived as a company returning value to shareholders. However, the long-term benefits depend on the company's ability to sustain growth and profitability without the need for that capital. It's also worth noting that these transactions were made to meet obligations from debt financial instruments exchangeable into equity, which adds a layer of complexity to the financial strategy.
STMicroelectronics operates in the highly competitive semiconductor industry, where innovation and capital investment are key drivers of success. The repurchase program could be seen as a move to consolidate the company's market position by potentially increasing shareholder value. By analyzing the industry context, we can surmise that STMicroelectronics is aiming to optimize its capital structure and shareholder returns in a market that is sensitive to technological advancements and economic cycles.
It's essential to monitor how these buybacks affect the company's market share and competitive edge. If the repurchased shares are eventually used for obligations arising from exchangeable debt instruments, it could also indicate a strategic financial maneuver to manage dilution and control the timing and impact of equity conversion. This might be particularly relevant if the semiconductor market is anticipating cyclical upswings or downturns that could affect stock prices.
Furthermore, the detailed disclosure of transactions provides transparency that is critical for investors' trust. The fact that STMicroelectronics holds approximately 1.2% of its issued share capital in treasury shares after these transactions gives the company flexibility in managing its capital allocation for future strategic moves, which could include acquisitions, further share repurchases, or employee compensation plans.
The governance implications of STMicroelectronics' share repurchase program are multifaceted. Share buybacks must be executed in compliance with market regulations, such as the EU's Market Abuse Regulation, to avoid any perception of market manipulation. The company's adherence to the regulatory framework, including the detailed disclosure of each transaction, demonstrates a commitment to transparency and good governance practices.
Shareholder approval and supervisory board consent for the program suggest alignment with shareholder interests, but it's also important to consider the broader implications for corporate governance. The repurchase program can impact voting power concentration, as treasury shares typically do not carry voting rights. This could potentially strengthen the influence of existing major shareholders or the management team.
Investors and stakeholders should assess the governance aspect of such programs, ensuring they align with the company's long-term strategy and do not serve as a short-term mechanism to prop up share prices at the expense of future growth opportunities or financial stability.
STMicroelectronics Announces Status of
Common Share Repurchase Program
Disclosure of Transactions in Own Shares – Period from Apr 02, 2024 to Apr 05, 2024
AMSTERDAM – April 8, 2024 -- STMicroelectronics N.V. (the “Company” or “STMicroelectronics”), a global semiconductor leader serving customers across the spectrum of electronics applications, announces full details of its common share repurchase program (the “Program”) disclosed via a press release dated July 1, 2021. The Program was approved by a shareholder resolution dated May 27, 2021 and by the supervisory board.
STMicroelectronics N.V. (registered with the trade register under number 33194537) (LEI: 213800Z8NOHIKRI42W10) announces the repurchase (by a broker acting for the Company) on the regulated market of Euronext Paris, in the period between Apr 02, 2024 to Apr 05, 2024 (the “Period”), of 148,522 ordinary shares (equal to
The purpose of these transactions under article 5(2) of Regulation (EU) 596/2014 (the Market Abuse Regulation) was to meet obligations arising from debt financial instruments that are exchangeable into equity instruments.
The shares may be held in treasury prior to being used for such purpose and, to the extent that they are not ultimately needed for such purpose, they may be used for any other lawful purpose under article 5(2) of the Market Abuse Regulation.
Below is a summary of the repurchase transactions made in the course of the Period in relation to the ordinary shares of STMicroelectronics (ISIN: NL0000226223), in detailed form.
Transactions in Period
| Dates of transaction | Number of shares purchased | Weighted average purchase price per share (EUR) | Total amount paid (EUR) | Market on which the shares were bought (MIC code) |
| 4/2/2024 | 43,522 | 39.673 | 1,726,648.31 | XPAR |
| 4/3/2024 | 35,000 | 39.2773 | 1,374,705.50 | XPAR |
| 4/4/2024 | 35,000 | 39.535 | 1,383,725.00 | XPAR |
| 4/5/2024 | 35,000 | 38.7743 | 1,357,100.50 | XPAR |
| Total for Period | 148,522 | 39.3354 | 5,842,179.31 |
Following the share buybacks detailed above, the Company holds in total 10,581,907 treasury shares, which represents approximately
In accordance with Article 5(1)(b) of the Market Abuse Regulation and Article 2(3) of Commission Delegated Regulation (EU) 2016/1052, a full breakdown of the individual trades in the Program are disclosed on the ST website (https://investors.st.com/stock-and-bond-information/share-buyback).
About STMicroelectronics
At ST, we are over 50,000 creators and makers of semiconductor technologies mastering the semiconductor supply chain with state-of-the-art manufacturing facilities. An integrated device manufacturer, we work with more than 200,000 customers and thousands of partners to design and build products, solutions, and ecosystems that address their challenges and opportunities, and the need to support a more sustainable world. Our technologies enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of cloud-connected autonomous things. We are committed to achieving our goal to become carbon neutral on scope 1 and 2 and partially scope 3 by 2027. Further information can be found at www.st.com.
For further information, please contact:
INVESTOR RELATIONS:
Céline Berthier
Group VP, Investor Relations
Tel: +41.22.929.58.12
celine.berthier@st.com
MEDIA RELATIONS:
Alexis Breton
Corporate External Communications
Tel: +33.6.59.16.79.08
alexis.breton@st.com
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FAQ
What is the purpose of STMicroelectronics' common share repurchase program?
How many ordinary shares did STMicroelectronics repurchase during the specified period?
What was the weighted average purchase price per share for STMicroelectronics' repurchase?
How much did STMicroelectronics spend on the repurchase of its own shares?
What percentage of STMicroelectronics' issued share capital do the treasury shares represent?
