GMO Financial Holdings, a subsidiary of Japanese conglomerate GMO Internet, has decided to repurchase its own shares from Daiwa Securities Group in a tender offering.
As detailed in Tuesday’s notification, the company will acquire 4,800,000 common shares that make 4.07 percent of the total outstanding shares in the company, and GMO will pay the amount involved in the transaction from its own funds.
The company stressed that even after the deal, it will stay cash-rich due to strong cash flows from its business and existing Liquidity of around JPY 50.6 billion (around $478.6 million).
Daiwa is the second-largest shareholder in GMO Financial, currently holding 11,100,000 common shares in the company at an ownership ratio of 9.41 percent. The brokerage acquired its position in the financial holding company in October 2015 by forming a 'capital and business alliance'.
A Transparent Deal
The company first approached GMO with an offer to sell half of its stake last July, and the conglomerate evaluated the offer since before its board made the decision on Tuesday.
“...GMO Financial HD expects that the acquisition of its own stock will contribute to accretions in earnings per share (EPS), return on equity (ROE) and other capital efficiencies, and will also lead to profit returns to GMO Financial HD shareholders,” the official notification noted.
Additionally, GMO highlighted that the acquisition of its own stock will not significantly affect its financial condition and dividend policy.
Furthermore, the company outlined that a tender offer is appropriate as the method provides clarity and objectivity. Under the offering, GMO Financial has proposed to Daiwa a tender offer price at a 10 percent discount to the company’s common stock closing price on the Tokyo Stock Exchange JASDAQ on Monday.
