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News
Softbank Scraps Stock Sale Plan, Bowing to Investors (Update2)
2008-07-09
 May 20 (Bloomberg) -- Softbank Corp., Japan's third-largest mobile-phone operator, abandoned plans to sell preferred stock, caving in to investor opposition.
Softbank dropped the plan after taking stockholders' opinions into consideration, the company said in a statement to the Tokyo Stock Exchange, without providing details such as the identities of the dissenting investors. The company's stock rose as much as 1.9 percent after the announcement, reversing a slide.
The decision indicates shareholder activism is making progress in the world's second-largest economy, according to Yoichi Goukon, a corporate governance advisor. In the past year, Tokyo Kohtetsu Co. and Ten Arrows Co. is among Japanese companies that changed plans after investor complaints.
``The trend is more prominent than last year,'' said Goukon, director at Japan Proxy Governance Inc., which offers advisory services for individual investors. ``Pressure from foreign institutional investors will probably strengthen.''
The Asian Corporate Governance Association, backed by investors with $5 trillion of assets including the California Public Employees' Retirement System, earlier this month submitted a study to the TSE criticizing Japanese corporate governance.
Softbank fell 0.3 percent to close at 1,903 yen in Tokyo after dropping as much as 2.5 percent. On May 8, Softbank's stock tumbled as much as 7.9 percent after the Nikkei newspaper reported its plan to sell stock, triggering concern that a sale would dilute the value of existing shares.
The company said later that day that a sale of as many as 1.8 billion preferred shares wouldn't dilute the value of common stock because the securities wouldn't be convertible.
``Although the company explained the existing shares will not be diluted, the market has been taking the plan in a negative way because there is no guarantee for that,'' said Hitoshi Hayakawa, a Tokyo-based analyst for Credit Suisse Group, who rates Softbank stock ``outperform.''
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