Son has argued for long now that SoftBank's share price does not reflect the value of its business and investments and he has been trying to close this gap for years
SoftBank CEO Masayoshi Son transformed his $5.5 billion fortune to a whopping $17 billion overnight.
Son announced a share buyback on February 6, following the release of strong quarterly earnings. As a result, shares of SoftBank jumped 17 percent, adding $14 billion to the Japanese tech investment giant’s market value. Based on his own stake, Son’s networth rose around $5 billion.
Son has argued for long that SoftBank's share price does not reflect the value of its business and investments and he has been trying to close this gap for years.
SoftBank's market value is currently around 11 trillion yen ($100.10 billion). However, Son argues that when one takes into account its stakes in SoftBank Corp, the Saudi-backed Vision Fund, chip designer Arm Holdings and others, the company’s holdings are worth 21 trillion yen.
The buyback, the biggest ever for SoftBank, is another attempt by Son to bridge this gap. The company plans to buy-back as much as 600 billion yen by the end of January next year, funded by proceeds from the December initial public offering of SoftBank Corp.
A buyback is a corporate action in which a company buys back its shares from the existing shareholders, usually at a price higher than the current market price. In simple terms, a buyback allows companies to reduce the number of shares outstanding in the market and increase the proportion of shares a company owns.
In 2016, Son had announced a buy-back when the Tokyo-based company was to buy over 500 billion yen.
Analysts say SoftBank would likely struggle to offload its large stake in companies like Yahoo Japan without pushing down the stock price and a sale of its stake in Alibaba is likely to entail a hefty tax bill.With inputs from Reuters