October 4, 2022
SoftBank asks group to hold talks on taking it private

According to a person familiar with the matter, SoftBank executives are in early-stage talks about taking the Japanese technology conglomerate private as the company seeks a new strategy after disposing of several large assets.

SoftBank’s equity valuation has been driven by discussions over the continued discounting of its individual holdings compared to the value of its individual holdings even after an asset sale program tried to close that gap, the source said, requesting anonymity. Because the discussion is private.

The discussions are at a very early stage and SoftBank management is divided about whether to go ahead with the deal, the source warned, adding that this is not the first time that SoftBank executives have held such discussions.

A spokesperson for SoftBank, which is led by billionaire Masayoshi Son, declined to comment. The news of the conversation was first reported by the Financial Times.

SoftBank shares are down a little over 10 per cent so far in 2020 and are trading at JPY 1,307.50 (around Rs 900) on the Tokyo Stock Exchange. This is in comparison to Japan’s Nikkei 225 index and below the price of JPY 1,500 (approximately Rs 1030) at which it sold units in its 2018 initial public exposure (IPO).

The IPO, which is still Japan’s largest stock market listing to date, was widely regarded at the time as the finalization of the group’s transition from a domestic telecommunications company to a global tech investor.

Yet since then, SoftBank has faced several challenges, including losses on investments made by its $100 billion (about Rs 7,33,300 crore) Vision Fund, active pressure from hedge fund Elliott Management and questions about significant option purchases during its recent run. Have faced – the rise in the US stock market.

There have also been talks on taking SoftBank private as SoftBank shifted its business strategy to become a long-term investor in businesses rather than a manager of companies.

SoftBank’s recent investment track record has been scrutinized, including a large bet on shared office provider WeWork, which resulted in SoftBank reporting a loss of $18 billion (roughly Rs. The group suffered record losses. ,

SoftBank on Monday announced that it has agreed to sell British chip designer Arm to Nvidia for $40 billion (about Rs 2,93,320 crore) in a cash-and-share deal.

The source said it is possible that Go-Private talks could pick up pace after the sale of Arm.

© Thomson Reuters 2020

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