Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Banking newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (March 23, 2020, 11:52 AM EDT) -- SoftBank Group said Monday it is planning a 4.5 trillion Japanese yen ($41 billion) asset sale and $18 billion stock repurchase program as the company tries to bolster its pile of cash and pay down debt in the wake of the coronavirus crisis.
The board of directors for the technology-focused investment giant has approved the plan, giving SoftBank Group Corp. the green light to sell as much as $41 billion worth of assets and buy back up to $18 billion worth of SoftBank common stock over the next four quarters, according to a statement. The freshly authorized program comes less than two weeks after SoftBank announced a separate, 500 billion Japanese yen share repurchase program on March 13.
SoftBank's portfolio has more than $245 billion of assets. Meanwhile, the company says it has about $15 billion of cash on its balance sheet.
"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," said Masayoshi Son, chairman and CEO of SoftBank. "This will allow us to strengthen our balance sheet while significantly reducing debt. Moreover, the monetization of assets represents less than 20 percent of the company's current asset value."
The move comes during a time when SoftBank believes its shares are "substantially undervalued," noting in Monday's statement that as of the end of last week the company's shares were trading at a 73% discount to their intrinsic value. Together, the two stock buyback programs announced this month are expected to result in SoftBank acquiring and retiring 45% of the company's stock.
The stock buybacks can come in multiple forms, including the acquisition of shares of SoftBank common stock through open market transactions, privately negotiated deals and tender offers.
Additionally, the SoftBank board of directors has hired an independent search firm — the identity of which was not disclosed — to find up to three candidates to become new independent board members at this year's annual general meeting of stockholders.
SoftBank has become one of the world's preeminent technology investors in recent years, including through its Vision Fund, which was formed in late 2015 and raised roughly $100 billion. The companies in which SoftBank invested through that fund include online sports retailer Fanatics Inc., corporate messaging business Slack Technologies, Indian e-commerce payment system Paytm, AI-focused Petuum Inc. and ride-hailing giant Uber Technologies Inc.
In July, SoftBank said it was aiming to raise $108 billion or more for the second iteration of its Vision Fund, although reports in February indicated the company was struggling to hit that mark.
SoftBank has also reportedly faced pressure in recent months from activist investor Elliott Management Corp., which in February was rumored to have accumulated a sizable stake in the company. Elliott reportedly believes decision-making for the Vision Fund could be improved.
Meanwhile, the announcement of the planned asset sale and stock buyback program comes as SoftBank is reportedly abandoning part of its planned $9.5 billion rescue package for WeWork. SoftBank said in October it was planning to take an 80% stake in WeWork.
Counsel information was not immediately available.
-- Additional reporting by Tom Zanki. Editing by Marygrace Murphy.
For a reprint of this article, please contact reprints@law360.com.
