In: Finance
“SoftBank Plans $4.8 Billion Share Buyback Following Pressure
From Elliott; The proposed share buyback isn't as large as the one
urged by the activist shareholder
Wall Street Journal; New York, N.Y. [New York, N.Y] 13 Mar
2020.
TOKYO—SoftBank Group Corp. said it would spend as much as ¥500
billion ($4.8 billion) to buy back up to 7% of its own shares,
following plunging stock prices and a pressure campaign from one of
the world's most aggressive activists.”
“Stock-Buyback Plans Shrink; The new coronavirus may threaten
companies' buyback plans—though a down market could also create a
buying opportunity
Wall Street Journal (Online); New York, N.Y. 09 Mar 2020.
U.S. corporations are signalling a reduced appetite for stock
buybacks this year, undermining a pillar of support for stocks at a
time of heightened volatility.
Companies authorized around $122 billion in future buybacks through
February, according to data compiled by equity research firm
Birinyi Associates, marking a nearly 50% drop from the same period
a year ago and representing the slowest pace in three years…”
Required:
Discuss the benefits of share buybacks. While having lots of firms
suspend buybacks under current market conditions, advise with
reasonings if SoftBank should suspend their share buyback
plan?