Softbank Corp announces $5.5 bn share buyback plan
Softbank Group Corp. is buying back as much as 600 billion yen ($5.5 billion) of stock, as founder Masayoshi Son steps up efforts to close the disparity between what he thinks the company is worth and its market value.
Proceeds from the 2.4 trillion yen initial public offering (IPO) of its telecommunications business in December will be used to fund the repurchase, the Tokyo-based company said on Wednesday. It’s the biggest-ever buyback in SoftBank’s history, and the shares rose in late trading.
Son, who is remaking the company into a technology investor from a telecoms operator, has long-argued its share price doesn’t reflect its business and investments. He spent much of his presentation explaining that Softbank’s holdings are worth 21 trillion yen net of debt, while the market value is 9 trillion yen.
The gap is even laid out on its website, which shows the stock trading at a 59% discount to a sum-of-the-parts calculation that includes the telecoms unit, Alibaba Group Holding Ltd, US carrier Sprint Corp. and Yahoo Japan Corp.
“What is that gap all about? Isn’t that weird?” Son said at the briefing. “I personally think the share price is too low.”
Softbank has had success with buybacks in the past. In 2016, Son announced his company would buy as much as 500 billion yen,
TOKYO :
which sent shares up by the limit the next day. The stock price doubled over the next year.
Of the total raised from the telecom unit’s IPO, 700 billion yen will go toward debt repayment, 700 billion yen for investments and 600 billion yen for the buyback, Son said, without saying what the rest was for.
The listing of the domestic telco operations and the pending sale of Sprint were part of a plan to focus more on the $100 billion Vision Fund.
The company’s portfolio includes the world’s biggest ridehailing company Uber Technologies Inc. and co-working giant Wework Cos. Thanks to valuation gains, profits from the Vision Fund and Softbank’s own Delta Fund more than tripled to 176 billion yen.
“The share repurchase fits perfectly with the goal of boosting the company’s valuation,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “There will be a positive reaction to the amount of the buyback.”
Softbank Group s hares jumped as much as 7.3% in afterhours trading on SBI Japannext Co.’s platform. Volume was low, with just about 17,000 shares trading hands, worth about 151 million yen. The stock closed at 8,462 yen before the results, compared with Softbank’s calculated shareholder value of 20,446 yen.
The Vision Fund sold all of its shares in US graphics chipmaker Nvidia Corp. in January, worth 398 billion yen, Softbank said. News of the share sale first emerged in December, when people with knowledge of the matter said it was likely.