Dai Nippon Printing up 13% on share buyback plan; gets Elliott's support (updated)

Dai Nippon Printing Co

10/02/2023 05:42

(Adds Elliott statement, context)
    By Kiyoshi Takenaka and Makiko Yamazaki
       TOKYO, Feb 10 (Reuters) - Shares of Dai Nippon Printing
Co Ltd (DNP)  7912.T  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  .N225  0.2% gain.
 (Reporting by Kiyoshi Takenaka and Makiko Yamazaki; Editing by
Janane Venkatraman, Nivedita Bhattacharjee)
 ((kiyoshi.takenaka@thomsonreuters.com; +81 3 4563 2788;))