Governance in Brief
February 27, 2020 | Editor: Martin Wennerström
SoftBank Group borrows USD 4.5 billion by pledging unit’s shares
Japan-based telecoms giant SoftBank Group (“SoftBank”) has entered into a USD 4.5 billion margin loan agreement with 16 local and international lenders by pledging around one third of its stake in subsidiary SoftBank Corp as collateral. SoftBank controls circa 66% of the unit’s share capital. In a similar move in 2018, the company pledged its shares in Alibaba Group Holding (“Alibaba”) as collateral for a USD 8 billion loan. SoftBank revealed that the loan proceeds will be used to strengthen its cash position.
The announcement comes, nonetheless, after US activist investor Elliott Management (“Elliott”) took a 3% stake, or around USD 2.5 billion, in the Japanese conglomerate at the beginning of the month. The hedge fund has been pushing for an expansion in the company’s share buybacks, within a range of USD 10 billion to USD 20 billion, claiming that SoftBank shares are undervalued. Elliott is also asking SoftBank to increase the board’s independence level, as well as diversity indicators. Initial reports showed that Elliott had urged SoftBank to reduce its USD 150 billion stake in Alibaba in order to fund the share repurchase plans. However, SoftBank’s founder, CEO and Chairman Masayoshi Son allegedly remains reluctant to divest from Alibaba.
Former Swedbank CEO faces legal woes
Former Swedbank CEO Birgitte Bonnesen is experiencing significant fallout from the money laundering scandal that prompted her termination in early 2019. The bank’s auditor, PricewaterhouseCoopers, has recommended against Bonnesen’s discharge from liability at the upcoming March 26 AGM, theoretically exposing her to future legal claims. Meanwhile, Bonnesen’s attorney has confirmed that she is to be questioned by the Swedish Economic Crime Authority in early April.
According to unnamed sources cited by local media, police will at this meeting formally notify Bonnesen that she is suspected of having committed a crime. Bonnesen’s situation is not entirely bleak, however, as the bank recently reported that she had received SEK 26.6 million (EUR 2.5 million) in severance pay in 2019, out of a total compensation of SEK 30.7 million (EUR 2.9 million).
HP implements poison pill ahead of Xerox bid
HP Inc. has adopted a one-year shareholder rights plan, ahead of Xerox’ announced cash and stock tender-offer at a price of USD 24 per share. The poison pill will activate if a shareholder or a group of shareholders buys a stake greater than 20% in the printing equipment provider, and allows all shareholders apart from the said buyer to purchase shares for a price at half of market value.
HP turned down an initial USD 22 per share offer made by Xerox in November of last year, claiming the bid undervalued the company and citing concerns over Xerox’ ability to pay for the deal. The latter responded in January 2020 by announcing the launch of a proxy fight against HP to win all board seats at the AGM to be held in April.
Intesa makes takeover bid for UBI
Italy’s second largest banking group by assets, Intesa Sanpaolo (“Intesa”), launched a EUR 4.9 billion all-stock offer for the country’s fifth largest bank, Unione di Banche Italiane S.p.A. (“UBI”). The price represents a 28% premium over the EUR 3.3 pre-announcement closing price. Following the takeover announcement, a committee representing the bank’s largest shareholder group, which holds around 18% interest in UBI argued that the offer is hostile and undervalues the company. Another group of shareholders owning a 1.6% stake made a similar assessment. Intesa’s CEO Carlo Messina revealed, however, that the bank does not intend to make a superior offer to UBI shareholders.
UBI’s board announced that will examine the proposal and potential alternatives, with the assistance of legal and financial advisors.