SoftBank, under the leadership of Masayoshi Son, sees a resurgence in its fortunes driven by the soaring market value of US-listed chip designer Arm. This boost in valuation has not only improved SoftBank’s earnings but also strengthened its position against activist investors, such as Elliott Management.
SoftBank Gains Traction with Arm’s Rising Market Value
SoftBank, led by founder Masayoshi Son, is benefiting from the increased market value of US-listed chip designer Arm. This rising valuation has significantly boosted SoftBank’s earnings, aiding Son in recovering from past unfruitful investments. It also provides a strategic advantage against activist investors.
Elliott Management, a US-based activist with a position beyond $2 billion, has re-engaged with SoftBank’s senior management, advocating for a $15 billion share buyback. This mirrors Elliott’s previous attempt in 2020, when it amassed a $3 billion stake and pushed for a $20 billion buyback.
Previously, SoftBank struggled with declining investment valuations, heavily impacted by the faltering market values of investments in companies like Uber and Slack. The firm’s diverse investments ranged from consumer goods to hotel start-ups, showing weak performance. Arm, then seen as a weak bet due to its reliance on smartphone demand, only underscored SoftBank’s broad, unfocused investment strategy.
However, current dynamics have shifted. SoftBank shares have surged 56% this year, and the company’s net asset value hit a peak of ¥27.8 trillion at the end of March, largely due to Arm’s market value. Notably, investments have increasingly concentrated on AI and chip-related sectors. Where Alibaba once made up half of SoftBank’s asset holdings, now Arm constitutes a similar share.
Considering these advances, Elliott faces more significant challenges in its push for buybacks. The firm’s future strategy could benefit from more targeted investments, avoiding previous tendencies toward disparate acquisitions.
