Nikkei rises as SoftBank Group soars on Sprint-T-Mobile merger approval

TOKYO, Feb 12 (Reuters) - Japan’s benchmark stock index Nikkei advanced on Wednesday, as heavyweight SoftBank Group Corp soared after a U.S. federal judge approved a merger between its U.S. wireless unit Sprint Corp and T-Mobile US Inc.

The Nikkei share average closed 0.74% higher at 23,861.21, while the broader Topix slipped 0.04% to 1,718.92.

SoftBank Group jumped 11.9% to become the country’s second-biggest company by market value after a U.S. federal judge rejected an antitrust challenge to the proposed takeover of SoftBank’s subsidiary Sprint by T-Mobile.

“This is obviously great news for Sprint... It is better news for SoftBank,” analyst Kirk Boodry at Redex Holdings wrote in a note on the Smartkarma platform.

The deal would allow SoftBank Group, which reports its earnings after market close on Wednesday, offload a troubled asset at a time when its other major bets face investor scepticism.

The tech conglomerate’s stock has risen 20% year-to-date, especially after U.S. activist Elliott Management amassed a stake of almost $3 billion and pushes for change at the firm, including $20 billion in stock buybacks.

Under pressure to boost shareholder value, SoftBank is likely to launch a share buyback this month, Jefferies analyst Atul Goyal wrote in a note.

SoftBank was the most-traded stock on the main board and the jump in the stock lifted the information and communication sector sub-index 2.3%, making it the best-performing sector on the Tokyo bourse.

However, more than two-thirds of the 33 sector sub-indexes were in negative territory, led by rubber products, electric and gas and construction.

Overnight, the S&P 500 and the Nasdaq inched to their second consecutive record closing highs, while the Dow closed flat, as Chinese officials said the deadly coronavirus epidemic could be contained by April.

In contrast to the upbeat mood on Wall Street, many Tokyo-listed stocks were weighed down by worries of supply chain disruptions from the coronavirus outbreak in China that has killed more than 1,100 people.

Nissan Motor Co lost 1.7% after the automaker temporarily halted production at its plant in Kyushu, southwestern Japan, due to supply shortage of parts from China.

Taiko Pharmaceutical Co Ltd surged 18.2% to hit its daily limit after the drugmaker, which makes infection-control products, raised its operating profit forecast for the year ending March and announced a stock split plan.

Elsewhere, chip-related companies attracted buying as the U.S. Philadelphia Semiconductor Index climbed 2% overnight, with Tokyo Electron Ltd rising 3.5% and Advantest Corp gaining 4.3%.

Reporting By Tomo Uetake; Additional reporting by Sam Nussey Editing by Aditya Soni and Arun Koyyur