Nintendo has issued a “Notification of Acquisition of Treasury Shares and Cancellation of Treasury Shares”. What this means is that the company intends to buy back some of its own shares and ‘cancel’ them, to take them out of the company’s batch of stock., meaning it will have less to pay out on dividends to investors.
This is only possible because of the high level of profit from the Switch, and Nintendo intends to buy up to 1.8 million shares between 6th August and 15th September, for around 1.51% of the company’s shares. Nintendo has set a limit of 100 billion yen to spend in the acquisitions, which comes out to $912.1 million USD.
Nintendo has stated the following about this planned level of acquisition.
To take advantage of our favorable cash position based on the performance of the Nintendo Switch business over the last few years, we are conducting a buyback of our shares as indicated on this slide.
As an entertainment brand, we strive for sustainable growth and increasing corporate value by offering unique entertainment experiences that play to our strengths. It is essential to have a solid financial base to continue to deliver surprises through our products and services in a business where trends are frequently profound, and the future is often difficult to predict. Based on this belief, we have maintained enough earnings in service of being able to consistently deliver on our mission of creating smiles through uniquely Nintendo experiences.
Effective use of cash continues to be an important management tool. We have a strong cash position thanks to the Nintendo Switch business exceeding our own expectations and as a result have fortuitously gained a renewed opportunity to consider how to most effectively invest our cash in a variety of strategic and meaningful ways. In addition to using a portion of the funds to buy back shares, we will continue to thoughtfully consider how to deploy funds and investments in the future.