SoftBank Group Corp. doubled the amount it plans to spend buying back shares and announced changes to its board, including the resignation of long-time director Jack Ma.
The company plans to repurchase as much as 500 billion yen ($4.7 billion) worth of its own stock by March 2021, it said in a statement. That’s on top of an equally sized re-purchase it had announced in mid-March.
The Tokyo-based company also announced several changes to its board, including the departure of Ma, the co-founder of Alibaba Group Holding Ltd. Three new directors have been nominated, including Chief Financial Officer Yoshimitsu Goto. SoftBank shares rose about 1%.
SoftBank, led by founder Masayoshi Son, is buying back shares to bolster its stock price after its portfolio of startup investments lost value. The company expects to book a record 1.35 trillion yen operating loss for the year ended March 31 when it reports financial results Monday afternoon in Tokyo. After aggressively investing in startups in recent years, SoftBank is now marking down the value of stakes in companies such as WeWork, Oyo Hotels and Uber Technologies Inc.
“The buyback announcement is a surprise, given the slew of low expectations and bad news,” said Justin Tang, head of Asian research at United First Partners.
The company said on Friday that it had bought 250.6 billion yen of its own stock since March 13, about half of the 500 billion yen budget for the original re-purchase plan.
The buyback announced in mid-March initially failed to lift SoftBank’s stock amid concerns the conglomerate’s portfolio of startups is particularly vulnerable to the economic shock from the coronavirus pandemic. When the shares plunged more than 30% in the week that followed, Son took an unprecedented step to unveil a second repurchase of as much as 2 trillion yen. The latest announcement is part of that broader plan.
“Son is also sending a message that he is serious about funding that 2 trillion yen buyback he announced in March,” Tang said.
The stock gained almost 70% since SoftBank said it plans to sell assets to raise as much as 4.5 trillion yen over the coming year to buy shares and slash debt.
The company’s Vision Fund business, focused on technology investments that contributed more than half of its reported profit a year ago, has swung to a projected 1.8 trillion yen loss. The company’s overall net loss will likely reach 900 billion yen.
Ma’s departure is a historic moment since he and Son have sat on each other’s boards for years. Alibaba is regarded as Son’s most successful investment.
