STMicroelectronics Announces Status of Common Share Repurchase Program
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Insights
STMicroelectronics' recent share repurchase program indicates a strategic move to manage its capital structure effectively. By buying back shares, the company is signaling confidence in its own financial health and future prospects. This can be a positive sign for investors, as share buybacks often lead to an increase in earnings per share (EPS) and return on equity (ROE), assuming the repurchased shares are retired. However, it is crucial to analyze the funding source for these buybacks. If the repurchase is financed through debt, it could potentially increase the company's leverage, leading to higher financial risk.
Moreover, the timing and price of the buybacks should be scrutinized. The weighted average purchase price of EUR 40.3793 suggests that the company believes the shares are undervalued, which can be an indicator of intrinsic value not reflected in the current market price. The repurchase of 0.02% of its issued share capital is a relatively small percentage, thus its impact on the market may be minimal. Nevertheless, the action contributes to a cumulative effect, as the company now holds approximately 1.0% of its issued share capital in treasury shares, which may be used for various corporate purposes including employee compensation and future strategic transactions.
From a market perspective, the repurchase program of STMicroelectronics should be evaluated in the context of the semiconductor industry's current trends and performance. The sector is known for its cyclical nature and buyback programs can be a method for companies to stabilize stock prices during volatile periods. The company's decision to repurchase shares could be seen as an attempt to shore up investor confidence amidst industry fluctuations.
Additionally, the repurchase program's impact on the company's market perception must be considered. It could convey to the market that STMicroelectronics is optimistic about its future cash flows and profitability. This could potentially attract more investors looking for companies with strong corporate governance and the ability to generate shareholder value. However, it is also important to note that share buybacks can be a double-edged sword if they are perceived as a lack of viable growth opportunities or if they come at the expense of research and development investments in such a technology-driven industry.
STMicroelectronics' repurchase program is conducted in compliance with the Market Abuse Regulation (MAR), which is designed to increase market integrity and investor protection within the European Union. The detailed disclosure of the transactions is a requirement under Article 5(2) of MAR, aimed at ensuring transparency and preventing market manipulation. The company's adherence to these regulations is essential to maintain legal and ethical standards and to avoid potential sanctions or reputational damage.
Furthermore, the purpose of the repurchase, as stated, is to meet obligations arising from debt financial instruments exchangeable into equity instruments. This is a sophisticated financial strategy that requires careful legal oversight to ensure that all transactions are executed in accordance with contractual obligations and regulatory requirements. The legal implications of holding treasury shares and the potential uses for these shares also need to be managed carefully to avoid any legal pitfalls.
STMicroelectronics Announces Status of
Common Share Repurchase Program
Disclosure of Transactions in Own Shares – Period from Jan 08, 2024 to Jan 12, 2024
AMSTERDAM – January 15, 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 Jan 08, 2024 to Jan 12, 2024 (the “Period”), of 195,641 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) |
| 1/8/2024 | 30,000 | 40.9298 | 1,227,894.00 | XPAR |
| 1/9/2024 | 44,984 | 40.5072 | 1,822,175.88 | XPAR |
| 1/10/2024 | 39,172 | 40.4893 | 1,586,046.86 | XPAR |
| 1/11/2024 | 40,000 | 40.2392 | 1,609,568.00 | XPAR |
| 1/12/2024 | 41,485 | 39.8737 | 1,654,160.44 | XPAR |
| Total for Period | 195,641 | 40.3793 | 7,899,845.18 |
Following the share buybacks detailed above, the Company holds in total 8,862,641 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
Attachment
FAQ
What is the purpose of the repurchase transactions?
How many shares were repurchased in the specified period?
What is the total amount paid for the repurchased shares?
What percentage of the company's issued share capital do the treasury shares represent?
