“Our business has gone through changes in business environment, a transition period, which we had never experienced before.”
☆ NintendObs Event – Nintendo’s 2015 Annual General Meeting of Shareholders.
Question:
The treasury shares of the company account for 16.44 percent of the total number of shares outstanding, which strikes me as a pretty high proportion. Treasury shares can be used for various purposes, including an MBO (management buyout), which you once ruled out in a newspaper interview for Nikkei, but I think they could be used for that purpose and they could also be used for a business alliance, M&A (merger and acquisition) and employee compensation. As a shareholder, I would welcome a cancellation of the treasury shares because it would enhance shareholder value. Please let me know your thoughts on utilizing the treasury shares.
Answer:
Iwata:
Regarding your question about whether the proportion of treasury shares to the total number of shares outstanding is higher than the general level, I would agree that it is higher than average. And as it was further increased after the stock buyback last year, we have discussed how to deal with the treasury shares in the company. This year marks the 32nd anniversary of the launch of Famicom (Nintendo Entertainment System) in Japan and, over the past two to three years, our business has gone through changes in business environment, a transition period, which we had never experienced before. It has been rapidly caused by several factors, including the popularization of the Internet and smart devices, innovative marketing methods and changes in purchasing behaviors of consumers. Now is the time we need to adapt well to these changes. Since we used the treasury shares for the capital alliance with DeNA at the beginning of this fiscal year ending March 2016, the current number of treasury shares is less than that described on the convocation notice for the general meeting of shareholders, but is not a dramatic decrease.
As I have mentioned in other Financial Results Briefings and Corporate Management Policy Briefings, we would like to continue to hold as many treasury shares as we do now over these few years while our business is in this transition stage. After we get through these changes in business environment and produce results from various new trials, we should start considering how to handle the treasury shares, including the retirement of the shares. Some say that a cancellation of treasury shares would boost the stock price, and there are also some examples in which it did not affect the stock price at all. Please allow us to continue to hold the current number of treasury shares until the end of this transition stage, as we might be able to make effective use of the shares for an M&A or business alliance during this time.
— The 75th Annual General Meeting of Shareholders
Source: Nintendo JP.
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