Reports that SoftBank is considering a gradual buyback of its shares has drawn widespread attention.
SoftBank Group Corp is considering a new strategy to go private by slowly buying back outstanding shares until CEO and founder Masayoshi Son has a large enough stake to squeeze out the remaining investors, according to a report from Bloomberg News.
Sources said that the buyback process would likely take more than a year, necessitating the sale of SoftBank assets in order to fund stock purchases. Masayoshi Son would not be buying shares himself under the plan, though his stake in the company – which now stands at around 27%, would increase as other investors sell their stock.
Once Son reaches 66% ownership, Japanese regulations would allow him to compel other shareholders to sell.
The gradual buyback plan would offer several benefits, according to insiders; it would allow the company to buy its own stock when it slips and avoid the need to pay a premium of around 25% that would come with a formal buyout. Gradual buybacks would also be more likely to receive support from shareholders.
The Japanese billionaire said in February that he thought SoftBank performed better as a public company, though he has more recently declined to comment on potential plans for going private in the future. “If our shares drop down, I will buy back more shares more aggressively,” he said during a November conference.
SoftBank owns stakes in many tech, energy and financial companies including Alibaba, Uber and DoorDash. The onset of the COVID-19 pandemic saw its shares fall by a record margin in March, wiping billions from its value, though it has since rallied more than 160%. Its market cap currently sits at $124.5 billion.
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SoftBank shares rose as much as 7% on early Wednesday trading following Bloomberg’s report on the stock buyback debate.
