SoftBank Group Corp., the largest investor in Alibaba Group Holding Ltd., said it will sell at least US$7.9 billion of its stake in the Chinese e-commerce giant to bolster its cash position and pay down debt.
SoftBank has established a new trust with the intention of divesting US$5 billion in Alibaba’s American depositary receipts in a private placement “to qualified institutional buyers”, Bloomberg quoted the Japanese company as saying in a statement released on Tuesday.
The company will also sell US$2 billion in shares back to Alibaba, US$400 million to members of the Alibaba Partnership and US$500 million “to a major sovereign wealth fund”.
SoftBank said the transactions will reduce its stake in Alibaba to about 28 percent from just more than 32 percent.
The sales are part of a broader effort by the Japanese technology giant to reduce its leverage, Bloomberg said.
“This investment has been phenomenally successful and, over the past 16 years, we have built a close relationship, working together on many exciting projects,” SoftBank chairman and chief executive Masayoshi Son said in the statement.
“In that time, we have not sold any Alibaba shares. There are huge opportunities ahead for Alibaba and SBG looks forward to the continued partnership.”
The trust established by SoftBank to divest the Alibaba shares will grant initial purchasers an option to buy as much as US$1 billion more, the company said.
“As SoftBank looks to strengthen its own balance sheet, Alibaba determined that it was the best use of our capital to re-invest in our own business through an efficient buyback of a large number of shares in our own company that is accretive to our stockholders,” Jack Ma, Alibaba’s chairman, said in a separate statement.
Alibaba shares have gained 21 percent to US$82 since the company’s initial public offering in September 2014.
The stock declined 3.1 percent in extended trading on Tuesday after the announcement of SoftBank’s planned share sale.
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