SoftBank Group Corp. will begin buying back as much as $4.8 billion in its own shares, after Elliott Management Corp put pressure on the Japanese company. This move amounts to 7% of the company’s own shares, but falls short of Elliott’s recommended buyback of as much as $20 billion.
Paul Singer’s activist investor group has amassed a holding of more than $3 billion in SoftBank, and has pressed Masayoshi Son’s company on buybacks and transparency. Many of SoftBank’s investors have turned critical of the company in recent months, after a series of high-profile stumbles in its $100 billion Vision Fund, the tech industry’s biggest investment fund. Still, Elliott believes SoftBank is undervalued given the company’s holdings, which includes a lucrative stake in Alibaba.
A SoftBank spokeswoman said the company had decided to conduct the buyback of its own accord after considering the risk that current stock market volatility could increase the deep discount that SoftBank’s stock has relative to the value of its holdings.
“Given the spread between what we consider to be the fair value of our company and growing market volatility, we decided on this policy for shareholder return,” SoftBank spokesman Kenichi Yuasa said. “The amount reflects consideration of liquidity on hand and financial stability.”
“The buyback continues SoftBank’s practice of re-purchases following large drops in the share price,” said Justin Tang, head of Asian research at United First Partners in Singapore, told Bloomberg. “Given the long drawn-out acquisition period, it is unlikely to provide much support in the market driven by emotions.”
A year ago the company launched a record $5.5 billion buyback that sparked a rally in its shares. This news failed to materialize positive momentum as the company’s shares closed down 5.5%.
Source: Equities News