blastprocessor
The Amiga Brotherhood
Buybacks usually depress the share price in the short term.
It does not sound like a buyback with cancellation (which would reduce the number of shares).
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Nintendo initiates 9.5 million share buyback ($1 billion, Yamauchi inheritance)
- Thread starter Captain Smoker
- Start date
Buybacks usually depress the share price in the short term.
It does not sound like a buyback with cancellation (which would reduce the number of shares).
Going by the maximum amount stated above, the buyback would set them back by about 1.22 billion $, which probably constitutes something like 8-12 % of their total assets.
Edit: Changed "cash reserves" to "total assets". I have virtually no knowledge of proper economic terminology.
Orniletter
Banned
So it isn´t as apocalytpic as this one hyperbolic post said ?
Good !
Good !
The_Endgamer
Member
I'm no business major, but wouldn't this strengthen their rights in a merger situation?
By default it should strengthen their control over the company but for a merger or partnership situation they could increase their own chances of continuing their own autonomy without much influence of the other company.
That's what I'm reading from this anyway. Other than the whole, Nintendo is artificially keeping their stock price high angle.
By default it should strengthen their control over the company but for a merger or partnership situation they could increase their own chances of continuing their own autonomy without much influence of the other company.
That's what I'm reading from this anyway. Other than the whole, Nintendo is artificially keeping their stock price high angle.
tehrik-e-insaaf
Member
Correct, it's just shy of 8% of their total assets, or a reduction of about 10% of their net assets (most of which are short-term investments and cash). And the poster above is also correct that they are kept and marked as treasury not cancelled - adding to an existing 13.8 million shares in treasury (or about 10% of the company).
Assuming Nintendo buys another 8% of the company later this year as the shares tank owing to non-recovery of the Wii U - 26% of the company could be sitting in treasury shares - perhaps more if Iwata keeps buying up more and more of the company. At a certain point the company could become much more viable for a management buyout.
We also don't know the exact power of treasury shares in NCL and whether management can exercise them at all - but what we know is that if infact someone attempts a hostile takeover, NCL could use the treasury shares to prevent that from happening by (one example) trying to find a party to acquire those shares with a mutual shareholding/buyback agreement.
Also, the existing parties in Japan that own Nintendo stock may also have certain restrictions on their ability to vote or have effectively assigned existing management the right to vote on their behalf. These kinds of shareholding agreements are relatively common in Japan.
Anyways IMHO if someone were infact stupid enough to attempt a hostile take over of NCL, they would be digging their own graves since talent attrition would end up killing the company - the IPs aren't as valuable as everyone thinks - Mario is relevant because of the talent behind it that has kept producing great games.
In the case of a merger, what factors determine which company has the bigger control? (Like, in whose pockets goes the profits.)
Hero of Legend
Member
Is there a reason why Yamauchi couldn't have just handed Nintendo all of his shares like if he knew his health was failing? Or that in his will he could've had the shares transferred with as little burden as possible to Nintendo?
I can't imagine he would've wanted Nintendo to spend such an outrageous amount of their own cash for his shares.
That and maybe by law you can't just say "here I'll just give you my shares for free!", maybe any share passing has to go by the bank and thus, money.
I can't imagine he would've wanted Nintendo to spend such an outrageous amount of their own cash for his shares.
That and maybe by law you can't just say "here I'll just give you my shares for free!", maybe any share passing has to go by the bank and thus, money.
Wasn't their actual cash reserve about 4 billion?
That is part of the negotations. See how many shares from company A/B change into how many shares of the joint company.
RoombaDance
Member
So if it's inheritance based we shouldn't read too much into M&A's?
wtf? Putting Nintendo's interests above his children's?
Random Painted HIghway
Member
Sounds like a no-win situation, but what else can you do when your large shareholders die, either buy the shares if you can or open yourself up to major outside problems.
tehrik-e-insaaf
Member
He could have put his shares into a foundation - but why would he do that? His kids suffered immensely for the time he put into NCL - it's clear he wanted them/his grandchildren to inherit something. He's already given up so much to NCL - from his pension to the best years of his life. He also wanted his daughter and Arakawa (who built NOA) to get something.
Besides, this has all been planned for some time. From exchanging the Seattle Mariners for stock within NCL (1.1% apparently) to saving up huge amounts of cash to pay off the inheritance bill. NCL knew this was coming and they have been planning for it. It's good for the long-term future of the company that it can deal with things like this rather than rely on a giant handout to sustain their financials.
Starwolf_UK
Member
My comment was more to other people in the thread. The document in the OP doesn't say anything I said but they mentioned that being a motive at the investors meeting (or whenever the buyback was announced).
Off-topic: If they had their former president effectively pumping loads of money into the company it really would be SEGA 2.0.
Does it actually? They can always sell those shares. It most certainly doesn't devalue Nintendo the amount of money they spent on buying those shares.
Hero of Legend
Member
I don't know, wasn't he distant from his kids? Or maybe I'm thinking of someone else. But he put Nintendo in such a high regard, he let them keep his retirement fund (which I recall becoming the Q Fund).
I deeply apologize if it came off as insensitive in anyway, it was never intentional, I was just curious.
I didn't know some of this. Sorry.
Osiris
I permanently banned my 6 year old daughter from using the PS4 for mistakenly sending grief reports as it's too hard to watch or talk to her
Indeed, I think the 81% loss of value over the last 7 years is a bigger concern than any potential loss from the differential between the buyback price and any future sale price.
tehrik-e-insaaf
Member
Agree with your sentiment - thank you for raising it.
And you are also absolutely right - Okawa-san basically gave away everything to Sega before he died. He and Yamauchi were colleagues (they were born a year apart) - and I am sure the experience with Sega played into the way Yamauchi thought about his own decisions relating to Nintendo. Sega ceased to exist as an independent institution and was forced to merge with Sammy in a few years after his death - part of transferring ownership for Yamauchi was probably also influenced by the fact that he didn't want NCL to get complacent.
sechsterangriff
Member
If his descendants are already successful and leave a comfortable life, I don't see why not. Nintendo is his life's work and if he thought his children don't need it or could even damage it, he has all the right to choose to leave someone else in charge.
In short: By buying the shares, they reduce their cash reserves. They have less money they can use directly.
From Wikipedia:
Thank you, not a massive dent to them really then.
Throwaway123456789
Member
How would it reduce the value of the company when the worth of the stocks purchased would be added to its value?
It's pretty much a
Code:
Cash -$1.2b
Treasury Stocks +$1.2bBasileus777
Member
So Nintendo's cash reserves dwindle even further. A couple more years of losses and those reserves will be looking pretty thin.
He's ike almost 70 living a cozy life in Hawaii.
Even if NCL does beg foe him to return, I doubt he'll accept
someguyinahat
Member
For all those saying "it prevents a hostile takeover," was there any indication that a company was planning this? Because to me it doesn't seem like that's the reason they did it.
Well, it should give more control of the company to its self and not the investors, which could slow down any bids to replace key members of Nintendo's Management. Officially, its to 'reward' investors, by giving them a way to make up for the lack of dividends.
KojiKnight
Member
It's not the reason, but it DOES offer security from such an option. You have to look at this long term as well... Nintendo isn't doing too hot right now, but in a few years it could be MUCH worse. If that stock was just floating around and had devalued enough to make Nintendo a worthy acquisition for it's properties it could be hostily taken over.
I imagine even if the worst case scenario came about and Nintendo DID eventually have to merge/be acquired, Nintendo would still want to have some final say in WHO.
They probably could... but what would becoming a private company gain them? You get a lot of capital from being a corporation.
badcrumble
Member
It'll stabilize the stock price, but this move diminishes Nintendo's cash reserves and limits the ability of stockholders to oust the company's current incompetent leadership. Not a good long-term move for a company that's bleeding money.
Osiris
I permanently banned my 6 year old daughter from using the PS4 for mistakenly sending grief reports as it's too hard to watch or talk to her
They had $8.6 billion last September.
So this will take them down to $7.38 billion, less anything else that has affected that reserve since September.
For comparison, and to get an idea of their burn rate (although some of this is due to investment) it was reported in April 2012 that they were sitting on $14 billion.
MikeE21286
Member
Yeah, either that or when they feel as though they are valued significantly more than what they'll have to buy them back for.
It's really either a real good sign or a real bad sign for Nintendo
Basileus777
Member
Weren't they already down to $7.5 billion?
CoffeeJanitor
Member
We've known about this for quite some time. Slowly we're seeing their moves play out...
Actually it's a good long-term move but a bad yet necessary short-time move. Yamauchi's shares flooding to the market would cause a stock price collapse.
GeekyDad
Member
Gross overstatement of the day.
Captain Smoker
Member
They currently hold 9,74 %
They're going to hold 16,44 % after the purchase.
23.293.439 shares of 141.669.000
Sammy Samusu
Member
How does it affect X worldwide release?
It won't effect any game release
Femmeworth
Banned
Nintendo going third party private.
Nobody's perfect. Yamauchi made some great moves, and some poor ones. Leaving Iwata in charge was a poor one.
PotionBleue
Member
Would it be possible at this point? What are the implications of this, how does it work?
I swear it'd be a slightly more interesting read than the quadrillon weekly Nintendo 3rd-party threads.
Shake your sentence enough and you'll find the right balance.
Every game company should be private, anyway.
Being publically traded is poison for a group aimed at creative endeavors that take years to finish but their success is measured in stock price over days.
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