SoftBank to sell £35 billion worth of assets to repay debt and expand share buyback

In
its announcement on Monday, SoftBank Group Corp (TYO:9984) said it plans on monetizing
or selling assets worth over £35 billion. The funds, according to SoftBank,
will be directed at reducing debt and repurchasing over £15 billion worth of its
shares. Following the announcement, SoftBank caught traction in the stock
market and posted its largest daily in around twelve years.

Monday’s
decision of share buyback comes on top of the company’s earlier announcement in
March that declared SoftBank’s intent to repurchase around £3.88 billion worth
of its shares. The earlier decision stemmed from Elliott Management’s (activist
hedge fund) pressure that demanded better returns for the shareholders.

SoftBank’s
Tech Bets On Uber And WeWork Fueled Investors’ Skepticism

SoftBank’s
stock was previously hit hard due to the rising skepticism among the investors
regarding CEO Masayoshi Son’s bets on Uber Technologies and office-sharing
startup, WeWork.

SoftBank
highlighted that it plans on selling the said assets over the next 4 quarters
that resulted in a 19% increase in its share price on Monday. The Japanese
multinational conglomerate holding company, however, didn’t specify the assets
that are likely to be sold.

SoftBank
had revealed earlier that it wishes to fund the initial £3.88 billion worth of
share buyback with debt that was largely criticized by investors and analysts
alike. In the recent statement, SoftBank expressed confidence in its business
as it unraveled plans of directing the proceeds after the buyback to repay its
debt, buy bonds, and improve its cash reserves.

SoftBank
has recently been faced with rising financial challenges as it bets on Uber and
WeWork failed, resulting in its
£86 billion worth of Vision Fund posting losses in two quarters in a row.
With the Coronavirus pandemic threatening to push the global economy into
recession, SoftBank’s struggle is getting that much serious.

SoftBank
Eyes Withdrawing A £2.5 Billion Bid On WeWork

SoftBank
is currently considering withdrawing a £2.5 billion bid on WeWork to purchase
additional shares.

At
the time of writing, SoftBank is exchanging hands at 3,187 JPY per share in the
stock market that translates to around 30% decline in 2020 so far. Its
performance in 2019, on the contrary, was reported fairly upbeat with an annual
gain of around 30%. The stock opened at around 3,600 JPY per share in January
2019 and closed the year significantly higher at around 4,700 JPY per share in
December. SoftBank currently has a market cap of just over £47 billion.