SoftBank Value Swells $11 Billion on Record Buyback Plan

  • Shares leap again after hitting daily-limit trading Tuesday
  • Buyback to be funded by asset sales and cash on hand

SoftBank Group Corp. surged again in Tokyo as its market value climbed by 1.2 trillion yen ($11 billion) since announcing a share buyback, or more than double what it plans to spend purchasing the stock.

The stock rose 6 percent at the close in Tokyo. SoftBank shares rose their daily limit Tuesday, its biggest jump in more than seven years, after the company outlined plans on Monday to spend as much as 500 billion yen buying back 14.2 percent of its shares.

Billionaire Masayoshi Son’s decision to buy back stock has pulled the shares out of a dive that sent them to their lowest point since the Japanese wireless operator bought struggling U.S. carrier Sprint Corp. in 2013. The stock had fallen 28 percent this year before the announcement, putting SoftBank’s market value below that of its investments in companies including Sprint and Alibaba Group Holding Ltd.

“The buyback’s timing coincided with an inflection point in Sprint’s difficult recovery, that’s why the market is responding so positively,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “Domestic operations are generating profit gains, which gives Son more options to choose from.”

Turning Point

Central to the stock’s under-performance has been Sprint, SoftBank’s biggest overseas investment after its stake in China’s Alibaba. Sprint’s shares have fallen 23 percent this year, while those of Alibaba have fallen 18 percent.

SoftBank’s market capitalization now stands at about 6.5 trillion yen, from 5.28 trillion yen after the close in Tokyo Monday, while the value of its holdings in public companies totaled about 8.3 trillion yen, according to its website. SoftBank also holds stakes in private companies, including India e-commerce provider Snapdeal and Social Finance Inc., a U.S. online lender.

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