Bridgestone’s US$1.8 billion buyback joins spree of Japanese deals

The Bridgestone logo is seen next to its Playz tyre in Tokyo, Japan, Jan 8, 2016. (Reuters pic)

TOKYO: Bridgestone, the world’s biggest tyremaker, announced a 200 billion-yen (US$1.8 billion) share buyback, joining a spree of similar deals by cash-rich Japanese companies from SoftBank Group to Sony.

The Tokyo-based tiremaker said Friday it will purchase as much as 7.6% of its own shares, which have fallen 14% over the past year.

Japanese investors have speculated that more companies will repurchase stock as local businesses haven’t made as many investments as their US counterparts, leaving them with cash to spare. In December, Mitsubishi UFJ Morgan Stanley Securities named at least half a dozen companies that are under pressure to improve shareholder returns.

The boom in Japanese buybacks is expected to reach 6.1 trillion yen in the fiscal year ending March 31, an all-time high, Nomura Securities estimated in October. In most quarters, it’s a welcome change from a tradition of companies hoarding cash they have no profitable use for, perhaps helping to explain why there’s little of the outcry that accompanies the practice in the US.

Bridgestone fell 0.9% to 4,195 yen in Tokyo trading Friday, giving the company a market valuation of US$28.9 billion. The buyback plan, which starts Monday, was announced after the stock market was closed for trading.

On Friday, the company also gave a full-year operating profit forecast that trailed analysts’ estimates.

Chief Executive Officer Masaaki Tsuya has been speeding up product development for connected and intelligent cars, combining tires and sensors to collect road conditions and tire information such as the amount of wear. Last month, Bridgestone said it will buy the telematics fleet-management business of TomTom NV for 910 million euros (US$1 billion).