[OPE-L] Intercapitalist competition: the case of Philips and the Yankee raiders

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Thu Dec 20 2007 - 16:09:51 EST

By Harro ten Wolde
AMSTERDAM (Reuters) - Dutch Philips Electronics said on Wednesday it plans to buy back 5 billion euros ($7.2 billion) of its own shares after hedge fund pressure for the firm to improve its performance and capital structure.

Philips shares gained 2.7 percent to 30.78 euros by 0331 EST, having hit 31 euros -- a two-month high, after the announcement, outperforming a 0.4 percent lower DJ Stoxx 50 . The stock was top European blue-chip gainer.

Philips said the new buy-back program, to be done within the next two years, starting on January 2, comes after the Dutch upper house of parliament approved a change in tax laws late on Tuesday that increases the amount companies can spend repurchasing shares free of withholding tax from January 1.

"The share buy back program is bigger in size than we anticipated and announced at an earlier date," Petercam analyst Eric de Graaf said in a client note, adding that the fact that the company announced its plans directly after the legislation was passed, signaled the urgency it has in this respect.

Philips ended its third quarter with 5.2 billion euros in cash, which makes it an attractive target for activist investors such as hedge funds, who often pressure for the return of surplus cash to shareholders.

Earlier this month, U.S. hedge funds Jana Partners LLC and D.E. Shaw Group, which said they together have a 1.6 percent stake in the company, said they wanted to talk to Philips on its performance and capital structure.

Analysts estimated early this year Philips could generate around 15 billion euros of cash from disposals and operations in 2007 and 2008 and it could take on debt. Philips is currently debt free.

Complete story: http://www.reuters.com/article/ousiv/idUSWEB095020071219?pageNumber=2&virtualBrandChannel=0Bcould ta€

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