Technology
Wednesday, June 5th, 2024 4:43 pm EDT
Key Points
- Elliott Management has rebuilt a significant stake in SoftBank Group, valued at over $2 billion, and is lobbying for $15 billion in share buybacks to boost SoftBank’s share price.
- SoftBank shares rose as much as 6.3% following the news, closing 4.6% higher, as Elliott’s advocacy highlights confidence in Masayoshi Son’s strategy and the potential for increased shareholder value.
- SoftBank has been investing heavily in artificial intelligence and U.K. chip designer Arm, reflecting its strategic shift to “offence mode” after accumulating a large cash reserve, while Elliott targets the company for the second time, focusing on the disparity between asset value and market valuation.
SoftBank Group’s shares surged by as much as 6.3% on Wednesday following a report that Elliott Management had rebuilt a substantial stake in the Japanese technology conglomerate and was advocating for significant stock repurchases. Elliott Management is pushing for $15 billion in share buybacks, contending that such a move would elevate SoftBank’s share price and demonstrate Masayoshi Son’s confidence in his strategic direction. On Wednesday, SoftBank shares reached a peak of 9,572 yen, marking a 6.32% increase from the previous day’s closing price, and eventually closed 4.6% higher at 9,420 yen.
Elliott’s renewed stake in SoftBank is valued at over $2 billion, and the U.S. fund manager has been engaging with SoftBank’s senior management over the past few months. This interaction underscores Elliott’s ongoing interest and influence within the company. Founded by Masayoshi Son, SoftBank has recently shifted its focus to aggressively invest in the artificial intelligence sector, following a period of accumulating over $35 billion in cash reserves during its “defense mode.”
SoftBank is also making significant investments in U.K. chip designer Arm, which went public last year and is planning to introduce AI chips by 2025 to meet rising demand. This investment highlights SoftBank’s strategic pivot towards AI and high-tech sectors. The report indicated that this is not Elliott’s first involvement with SoftBank; the firm had previously invested $2.5 billion in 2020, advocating for $20 billion in share buybacks and pushing for governance reforms at that time.
The latest push from Elliott is focused on addressing the substantial disparity between the total value of SoftBank’s assets and its market valuation. Despite the report, neither Elliott Management nor SoftBank Group has immediately responded to requests for comments. The development illustrates the ongoing strategic maneuvers and financial engagements influencing SoftBank’s market activities and investor relations.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/05/softbank-rises-as-much-as-6point3percent-after-report-of-elliott-managements-buyback-push.html
