SoftBank tightens grip on Yahoo Japan
TOKYO SoftBank Group is increasing its stake in Yahoo Japan through a US$2 billion, three-way deal with US firm Altaba to deepen ties with the internet heavyweight ahead of an IPO of its telecoms unit.
Under the deal, SoftBank will buy 221 billion yen ($2billion) of Yahoo Japan shares from Altaba, formerly internet giant Yahoo Inc. Yahoo Japan will then buy back 220 billion of stock from SoftBank.
As a result of the transaction SoftBanks stake in Yahoo Japan will rise to 48.17 per cent from 42.95 per cent with just a $9 million net investment. Altaba, Yahoo Japans second largest shareholder, will have about 27 per cent and end a joint venture partnership.
SoftBank said in a statement yesterday the deal will strengthen cooperation between the company, one of Japans big three telecoms firms, and Yahoo Japan, an internet heavyweight in areas such as news and shopping.
The synergies between SoftBank and Yahoo Japan are consistent with SoftBank Groups broader strategic synergy group initiative, SoftBank Chief Executive Masayoshi Son said in the statement.
SoftBank and its Vision Fund, the worlds largest private equity fund standing at over $93 billion as of May last year, have been taking minority stakes in technology companies around the world that Son believes will come to dominate their respective fields.
The news of the Yahoo Japan deal comes as SoftBank prepares to list its domestic telecoms unit in what could be the largest Japanese IPO in nearly two decades.
Yahoo Japan could use SoftBanks telecom services to boost demand for online shopping and mobile payments among Japans increasingly net-savvy shoppers. SoftBank, through Yahoo Japan and others, is offering its mobile users an increasingly wide range of top-up services in addition to a basic phone subscription.
Yahoo Japans shares were up nearly 12 per cent in early afternoon Tokyo trading. Despite that jump, its shares are down more than 22 per cent this year.
Its clear that using excess funds for share buybacks is the only way Yahoo Japan has to hold up its share price, said Yasuo Sakuma, chief investment officer at Libra Investments. The firm does not hold positions in Yahoo Japan or SoftBank.
Altaba has been selling down its Yahoo Japan stake. Two Altaba appointments to the Yahoo Japan board will step down as a result of the transaction announced yesterday.
SoftBank shares were up two per cent, with the benchmark Nikkei 225 index up one per cent. REUTERS