Soft­bank to sell stake in Alibaba

$7.9b trans­ac­tion marks Ja­panese firm’s first sale of shares in e-com­merce giant since 2000

China Daily (Canada) - - LIFE - By MENGJING mengjing@chi­

Ja­pan’s Soft­Bank Group Corp has an­nounced its plan to sell $7.9 bil­lion worth of its stake in Alibaba GroupHold­ing Ltd in an aim to gen­er­ate pro­ceeds to cut debt.

Soft­Bank, which is Alibaba’s largest share­holder, has es­tab­lished a new trust with an in­ten­tion of sell­ing $5 bil­lion in Alibaba’s Amer­i­can de­posi­tary re­ceipts to qual­i­fied in­sti­tu­tional buy­ers, the Ja­panese com­pany said in a state­ment.

Soft­Bank will also sell $2 bil­lion in shares back to Alibaba, $400 mil­lion to mem­bers of the Alibaba Part­ner­ship of se­nior ex­ec­u­tives, and $500 mil­lion to a ma­jor sov­er­eign wealth fund, which has yet to be iden­ti­fied.

The trans­ac­tion marks Soft­Bank’s first sales of Alibaba shares since it in­vested in the Chi­nese e-com­merce firm in 2000. With the sales, Soft­Bank will see its stake in Alibaba re­duce from 32.2 per­cent to 28 per­cent, but it is still Alibaba’s largest share­holder.

In­vestors have been wor­ried about fi­nances at Soft­Bank since it bet $20 bil­lion on ac­quir­ing a ma­jor­ity stake in the United States wire­less car­rier Sprint Corp in 2013. The in­vest­ment is Soft­Bank’s largest ever but the com­pany has been burn­ing cash due to fierce com­pe­ti­tion to se­cure sub­scribers.

Pre­vi­ous me­dia re­ports also said Soft­Bank was con­sid­er­ing sell­ing its stake in Fin­nish smart­phone game maker Su­per­cell to lower its debt.

Michelle Ma, an an­a­lyst with Bloomberg In­tel­li­gence, said Soft­Bank is demon­strat­ing its abil­ity to un­lock value from its in­vest­ment, which may boost in­vestors’ con­fi­dence.

Some an­a­lysts said the tim­ing of the Soft­Bank stock sale was not aus­pi­cious given that Alibaba un­nerved in­vestors last week when it re­ported that the US Se­cu­ri­ties and Ex­change Com­mis­sion was in­ves­ti­gat­ing its ac­count­ing prac­tices.

But Ma from Bloomberg In­tel­li­gence de­scribed Alibaba as Soft­Bank’s “most valu­able as­set”. “It will still hold 28 per­cent of Alibaba af­ter the sale, in­di­cat­ing that Soft­Bank con­tin­ues to be­lieve in the Chi­nese e-com­merce giant,” Ma wrote in a re­port.

The two com­pa­nies said they would main­tain a strate­gic part­ner­ship. Masayoshi Son, chair­man and CEO of Soft­Bank, will re­main a board direc­tor of Alibaba, and Alibaba Ex­ec­u­tive Chair­man Jack Ma will re­main a board direc­tor of Soft­Bank.

“Un­der the lead­er­ship of Masayoshi Son, Soft­Bank has been a highly val­ued, long­time part­ner of Alibaba for more than 16 years, and we look for­ward to con­tin­u­ing our strong part­ner­ship to­gether,” said JackMa.

“As Soft­Bank looks to strengthen its own bal­ance sheet, Alibaba de­ter­mined that it was the best use of our cap­i­tal to rein­vest in our own busi­ness through an ef­fi­cient buy­back of a large num­ber of shares in our own com­pany that is ac­cre­tive to our stock­hold­ers,” Ma said in a state­ment onWed­nes­day.

Bloomberg and Reuters contributed to this story.

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