SoftBank To Buy Back $4.8B Worth Of Shares After Push From Elliott

SoftBank Group Corp. SFTBY has said its Board of Directors has decided to buy back 7% of total shares, excluding treasury stock, worth $4.8 billion (500 billion yen).

What Happened

SoftBank will repurchase 7% of its total stock in a second major buyback after coming under pressure from activist shareholders Elliott Management Corp., which had raised its stake in the group by $2.5 billion in February. Last year SoftBank repurchased 600 billion yen or $5.5 billion worth of shares.

Elliot had been pushing SoftBank to repurchase $10 billion to $20 billion of its stock. Last month an Elliott spokesperson said, “Elliott has engaged privately with SoftBank’s leadership and is working constructively on solutions to help SoftBank materially and sustainably reduce its discount to intrinsic value.”

Why It Matters

In addition to pursuing a buyback, Elliott also wants SoftBank to improve transparency and change the decision-making structure at its ‘vision fund’ and empower its board with more independence and diversity.

Softbank’s operating profit fell by 99.4% to $23.5 million in the October-December 2019 quarter from $3.98 billion in a similar quarter last year. The fall in profits was led by its $100 billion ‘vision fund.’ 

SoftBank’s investments have been faring poorly with co-working space provider WeWork and ride-sharing company Uber failing to deliver and others such as Oyo Rooms, the hotel booking platform facing increasing challenges. 

In February, SoftBank said that it was cooperating with Elliott. The company explained that “SoftBank always maintains constructive discussions with shareholders regarding their views on the Company and we are in complete agreement that our shares are deeply undervalued by public investors.”

Price Action

SoftBank’s OTC shares traded lower by 13.07% at $17.09 on Thursday. The company’s shares closed lower by 5.05% at $35.59 in Tokyo on Friday.