SoftBank's Son considered management buyout

September 14, 2015 09:50
Masayoshi Son planned to team up with an overseas partner for the buyout before scrapping the deal. Photo: Bloomberg

SoftBank Group Corp. chairman Masayoshi Son considered taking the Japanese telecommunications group private through a management buyout earlier this year amid its sagging share price, Bloomberg News reported, citing unnamed people familiar with the matter.

Son had thought of teaming up with an overseas partner to carry out his plans, but talks ended at least three months ago and the plan is no longer under consideration, the news agency said.

Even if he decided to proceed, there is no certainty a deal could have been completed, one of the sources said.

With SoftBank down 16 percent since this year’s peak in April, it’s now cheaper for the billionaire to take private the company he founded more than three decades ago, the report said.

“SoftBank shares are relatively cheap,” Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities in Tokyo, said. “It’s also inexpensive considering the stocks it owns.”'

The company has more than 1,000 investments, and its three biggest shareholdings of Alibaba Holding Ltd., Sprint Corp. and Yahoo Japan Corp. are worth a combined 9.4 trillion yen (US$78 billion), according to its website.

That compares with SoftBank’s market value of 7.8 trillion yen at Friday’s close.

SoftBank is also the biggest investor in, a closely held Indian e-commerce company valued at US$4.7 billion.

Son planned to team up with an overseas partner for the buyout before scrapping the deal on a disagreement about financing conditions, according to the sources.

SoftBank was worth about US$15 billion less than its biggest holdings as of April 28, the company’s 2015 market-value peak.

That difference has dropped to about US$13 billion, mostly because of the plunge in the value of Alibaba’s US-listed shares amid the broad sell-off in China-based companies.

Since shelving the plan, SoftBank has announced plans to buy back 120 billion yen of stock to help revive the shares while also boosting its stake in Sprint.

Part of the SoftBank share drop comes from concern about Sprint, which only recently started to turn around its performance.

“SoftBank is undervalued in terms of its dollar-based assets,” said Makoto Kikuchi, chief executive officer of Myojo Asset Management. “It’s not strange for Son to think about a management buyout.”

Son, Japan’s second-richest man, is the biggest shareholder in SoftBank. The value of SoftBank’s publicly traded shares excluding his 19.3 percent stake is about US$52 billion.

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