By Kiyoshi Takenaka and Makiko Yamazaki
TOKYO (Reuters) – Shares of Dai Nippon Printing Co Ltd (DNP) jumped 13% on Friday, a day after the Japanese component supplier promised its largest ever share buyback, getting activist shareholder Elliott Management Corp’s backing as the company set new financial targets.
The major automotive battery components maker said on Thursday it planned to carry out its largest ever share buyback to boost capital efficiency, without giving the date or size of the repurchase.
The company would also aim to achieve market value above book value in the near future, it said.
A company spokesperson said on Friday DNP’S price-to-book multiple has recently hovered just below 0.8, and added that details of those measures would be laid out in a new business strategy set to be unveiled in March.
Elliott, which sources said have built a “significant” stake in DNP, released a statement on Friday welcoming the plan.
“In our view, these measures represent an important initial step in addressing DNP’s persistent and unwarranted undervaluation,” the activist investor said.
With about half of listed Japanese firms trading below their book value, the Tokyo bourse is planning to urge companies with underperforming stocks to discuss and disclose measures to improve capital efficiency.
To address chronic stock underperformance, DNP has been reducing cross-shareholding, a controversial practice of business partners owning each others’ shares.
DNP shares were up 13% at 3,595 yen in afternoon trade, far outperforming the Nikkei average’s 0.2% gain.
(Reporting by Kiyoshi Takenaka and Makiko Yamazaki; Editing by Janane Venkatraman, Nivedita Bhattacharjee)
