Dai Nippon Printing Co. surged the most on record after it announced plans for its largest-ever stock buyback following pressure from activist investor Elliott Management Corp.
(Bloomberg) — Dai Nippon Printing Co. surged the most on record after it announced plans for its largest-ever stock buyback following pressure from activist investor Elliott Management Corp.
Shares of the 146-year-old printing and electronic products manufacturer climbed as much as 18%, to the highest since May 2007. The company is planning a “record” buyback to improve capital efficiency, it said Thursday as it announced results for the latest quarter.
The venerable blue chip received a a similar jolt last month after news that Elliott was building a stake in the company and pressing for a more aggressive share repurchase. The hedge fund run by Paul Singer has previously targeted Japanese companies including Toshiba Corp. and SoftBank Group Corp.
“We look forward to continuing our constructive engagement with the company,” Nabeel Bhanji, a portfolio manager at Elliott, said in a statement following Dai Nippon Printing’s announcement. The measures “represent an important initial step in addressing DNP’s persistent and unwarranted undervaluation,” he added.
The buyback is “a very positive sign” that Japanese companies are responding to efforts by the government, proxy advisers and activists to improved their returns on equity, said Mio Kato, an analyst at LightStream Research.
“I think they were moving in the right direction anyway, but with Elliott acting as a friendly activist I was optimistic that the pace of their reforms would accelerate and it looks like that is happening,” he said.
–With assistance from Jeanny Yu.
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