Softbank is selling off $41 billion in assets this year to lower its debts, buyback shares and boost its cash reserves as it seeks to strengthen its footing and reassure investors as its investments are exposed to economic shocks caused by coronavirus.
“This program will be the largest share buyback and will result in the largest increase in cash balance in the history of SBG, reflecting the firm and unwavering confidence we have in our business,” Billionaire owner Masayoshi Son said in a statement on Monday.
It is not known which assets would be sold, but some $18 billion will go towards a share buyback. It follows SoftBank’s $4.5 billion share buyback announced earlier this month.
Softbank’s shares surged more than 18% on Monday, its biggest gain in nearly 12 years.
The Tokyo-headquartered conglomerate said its shares were undervalued at 73% its intrinsic value, “the largest discount in the company’s history.” Investors have been skeptical after Son’s underperforming bets on the likes of Uber and WeWork.
SoftBank has holdings in e-commerce giant Alibaba, while its investments in Uber and troubled office-sharing firm WeWork are well-documented.
Key background: The latest share buyback announcement follows pressure from activist fund Elliott Management, which bought a stake in the company in February, to increase buybacks and shareholder returns. Meanwhile funding for SoftBank’s second Vision Fund has been slower than expected after the performance of its first Vision Fund.
