SoftBank Group Corp. is prepared to spend a record 500 billion yen (US$4.4 billion) buying back stock after the Japanese wireless carrier saw its shares drop to their lowest since buying Sprint Corp. in 2013.
SoftBank will purchase as many as 167 million shares, or 14.2 percent of its stock, using cash holdings and the proceeds of asset sales, Bloomberg News reported, citing a statement from the Tokyo-based company.
The company, saddled with about US$100 billion of total debt, said it will not resort to more loans to fund the program.
Chairman Masayoshi Son has been dogged by doubts about his ability to turn around Sprint as investor concerns drove a 28 percent plunge in SoftBank stock so far this year.
The Japanese company’s market value has fallen below that of its own investments in companies including Alibaba Group Holding Ltd.
“This is a good buyback, considering how low their valuation has fallen,” said Atul Goyal, an analyst at Jefferies Group LLC. “Nothing so bad happened with Sprint and Alibaba to justify the drop in SoftBank shares.”
SoftBank shares rose about 12 percent in European trading after announcing the program. Before the announcement, the stock climbed 5.7 percent in Tokyo, lagging the benchmark Topix index’s 8 percent gain.
The massive buyback program, which will take place over the next 12 months, won’t significantly affect SoftBank’s debt position or ratings, Japan Credit Rating Agency Ltd. said in a statement Monday.
– Contact us at [email protected]