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SoftBank to monetise $41bn to expand share buyback and reduce debt

By Ramla Soni

Share buyback will be in addition to the 500 billion yen buyback announced this month

SoftBank Group has said it is selling or monetising up to 4.5 trillion yen ($41 billion) in assets to buy back 2 trillion yen of its shares and reduce debt. Its stock had the biggest daily gain in nearly 12 years.

The share buyback will be in addition to the up to 500 billion yen buyback announced earlier this month, which was the Japanese conglomerate’s biggest ever repurchase.

The buyback tops the $20 billion in purchases sought by activist hedge fund Elliott Management, which has put pressure on SoftBank to improve shareholder returns. It will see the company retire 45 per cent of its shares.

SoftBank’s share price extended early gains, closing up almost 19 per cent following the announcement of the asset sales, which will be executed over the next four quarters.

SoftBank did not disclose specifics on what would be sold.

Beyond the share buyback, proceeds will be used for repaying debt, buying back bonds and boosting cash reserves.

CEO Masayoshi Son previously offloaded part of the stake in Alibaba, of which SoftBank currently owns 25 per cent, in a complicated transaction.

The asset sales come as SoftBank’s conglomerate discount, or the difference between its market capitalisation and the value of its assets, last week reached a record 73 per cent.

FURTHER READING: SoftBank shares see huge increase after US judge approves T-Mobile and Sprint merger

FURTHER READING: SoftBank-backed companies announce staff layoffs

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