Shares in Japan’s Dai Nippon Printing soared on Friday by their biggest-ever margin after the corporate appeared to bow to strain from activist investor Elliott Administration by asserting a document share buyback.

A surge of as a lot as 18 per cent took shares within the 146-year-old printing and high-tech conglomerate to their highest degree since 2007, including to an advance that has now propelled them 40 per cent larger within the three weeks for the reason that Monetary Occasions reported on Elliott’s stake within the firm.

Its funding in DNP is a part of a broader resurgence of investor strain on Japanese firms, which had receded in the course of the pandemic. The retail large Seven & I and printer maker Ricoh are presently underneath assault from shareholder activists, with banking advisers warning company purchasers that the general variety of campaigns could be anticipated to rise.

At an earnings presentation on Thursday, DNP instructed traders it will intention to ship a return on fairness of 10 per cent and for its shares to commerce above guide worth. The corporate additionally revealed plans for “the most important acquisition of treasury shares in DNP’s historical past with the intention of bettering capital effectivity”. It didn’t instantly present particulars on the timeline and measurement of the buyback.

The FT reported final month that Elliott, one of many world’s largest activist funds, had constructed a stake of just below 5 per cent, value about $300mn on the time, within the firm. The worth has now risen to round $420mn. The hedge fund has been selective thus far in its involvement with Japanese firms, with SoftBank and Toshiba being probably the most high-profile examples.

In keeping with folks near the fund, Elliott had set out a sequence of calls for for extra shareholder-focused motion by DNP’s administration, which has been sitting on a big mountain of money and multibillion-dollar stakes in different listed Japanese firms. Its share worth had been languishing on the similar ranges seen 20 years in the past.

Elliott additionally sees DNP as having untapped worth in two of its non-traditional companies. One offering a vital part in electrical car batteries and one other that provides a key half in screens for high-end cellphones have dominant international market share.

Individuals near Elliott stated discussions between the fund and DNP, whereas usually pleasant, had included direct requests for the corporate’s surplus money for use for buybacks to enhance the return on fairness ratio. The hedge fund additionally wished cross-shareholdings to be bought off within the identify of bettering governance requirements, minimising conflicts of curiosity and deploying capital extra beneficially for traders.

Elliott senior portfolio supervisor Nabeel Bhanji stated the fund welcomed DNP’s dedication to announce the most important share buyback in its historical past, speed up the disposal of its cross-shareholdings and deal with rising its return on fairness goal to 10 per cent.

“In our view, these measures signify an necessary preliminary step in addressing DNP’s persistent and unwarranted undervaluation. We stay up for persevering with our constructive engagement,” Bhanji stated in a press release.