5.70 0.00 (0.00%)
After hours: 4:19PM EDT
|Bid||5.65 x 21500|
|Ask||5.69 x 27000|
|Day's range||5.64 - 5.70|
|52-week range||4.49 - 7.56|
|Beta (5Y monthly)||1.28|
|PE ratio (TTM)||5.37|
|Forward dividend & yield||0.37 (6.62%)|
|Ex-dividend date||27 Mar 2020|
|1y target est||9.26|
(Bloomberg) -- The record $40 billion deal for wireless carrier NTT Docomo Inc. is sparking discussion of whether an even bigger Japanese buyout could be in the works: SoftBank Group Corp.Founder Masayoshi Son has debated for years whether to take his conglomerate private because of a persistent discount between his stock and the perceived value of his assets, particularly Alibaba Group Holding Ltd. shares. The 63-year-old billionaire revived informal talks this year after his shares tumbled and he sold off assets.The Docomo deal signals Japan has plenty of capital for deals on the kind of scale unthinkable in the past. Nippon Telegraph & Telephone Corp. will borrow the entire purchase price to finance the affiliate’s buyout, even though it had 1.09 trillion ($10.3 billion) in cash and equivalents at the end of March.“A successful buyout of Docomo could spur a similar move by SoftBank. There is plenty of liquidity for both,” said Justin Tang, head of Asian research at United First Partners in Singapore. “For lenders, this can be a huge source of revenue. And shareholders can have a catalyst in which to realize the value of their holdings.”Son has been frustrated that investors won’t pay more for his stock considering his company’s holdings. SoftBank posts on its website an estimate that its shareholder value is about 13,000 yen a share, a figure it calculates by adding the value of stakes in Alibaba, SoftBank Corp. and other assets, then subtracting debt. That’s roughly half the roughly 6,500 yen a share SoftBank Group trades at.After his shares plummeted in March, Son announced a record 4.5 trillion yen asset sale plan and a record 2.5 trillion yen buyback program. In addition, he’s cut a deal to sell chip designer Arm Ltd. to Nvidia Corp. for about $40 billion in cash and stock, although regulatory approval is expected to take more than a year.“Given SoftBank’s valuation discount and the availability of cheap financing, there is a good chance of an MBO,” said Tang.Goldman Sachs Group Inc. analysts published a research note after the Docomo buyout, arguing the deal is likely to spark further corporate alignments in the country. The report didn’t specifically mention SoftBank.The Docomo deal does present at least two challenges for SoftBank. NTT is buying out public shareholders in part so it can lower wireless rates more easily, a competitive threat that may hurt SoftBank Corp., Son’s domestic telecom unit. Newly anointed Prime Minister Yoshihide Suga has made lower phone tariffs a key part of his early agenda.In addition, NTT is paying 40% more than Docomo’s share price before the announcement. SoftBank shareholders could ask for a similar premium if Son pursues a buyout, according to Bloomberg Intelligence analyst Anthea Lai.SoftBank Group’s market capitalization is about $128 billion, so that kind of premium would mean valuing the company at $179 billion. That would be by far the largest buyout ever.Between the stake held by Son himself and the treasury shares SoftBank has already bought back, more than 30% of the company’s stock is already controlled by management, according to Bloomberg-compiled data.SMBC Nikko Securities Inc. analyst Satoru Kikuchi wrote earlier this month that a management-led deal to take the company private looked feasible.“The firm seems to be selling off assets rapidly and is considering the sale of its ARM holdings earlier than initially planned,” Kikuchi said in a research note. “Given the scale of its buyback operations, we think delisting via management buyout is a possibility.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp. suspended its multi-billion dollar buyback program in August, bringing to a halt the significant share price gains that Masayoshi Son’s conglomerate has largely enjoyed since the plan and asset sales were announced earlier this year.In a filing to the stock exchange Tuesday, SoftBank said it hadn’t bought back stock between Aug. 4 and the end of that month, after previously announcing it had acquired shares on Aug. 3. It blamed “nonpublic facts” around insider trading for the inaction, a likely allusion to its mega-deal to sell its Arm Ltd. chip division for $40 billion to Nvidia Corp., announced Monday.Without the support of the buyback, shares were basically flat in August, rising just 0.05%. SoftBank shares have gained every month this year since the coronavirus pandemic-fueled a market collapse in March. That month, it announced plans to launch asset sales and also scoop up stock worth as much as $23.6 billion during the fiscal year. SoftBank shares surged by more than 20% in July.The stock hit its 2020 high of 6,932 yen on Aug. 3 -- the last day the company purchased shares, according a statement to the Tokyo Stock Exchange on Tuesday. September’s data are not yet available.With the proposed deal with Nvidia now announced, SoftBank may be able to restart its buyback program. Shares have risen every day this week, adding as much as 3.1% on Wednesday.Softbank has promised to spend as much as 2.5 trillion yen ($23.6 billion) to buy back stock since the start of this year, but has so far only spent 1 trillion yen of that amount. As of the end of August, it had yet to use any of the 500 billion yen it pledged in a program decided on June 25. It also hasn’t launched the 1 trillion yen buyback plan the board agreed on July 30. SoftBank acknowledged in July that it might not complete the buybacks by its originally scheduled target of March 31, the end of its fiscal year.SoftBank has bought an average of about 16 billion yen of shares every day in which it has been in the market this year, and as much as double that on some days. Despite a wobble last week, SoftBank shares are worth more than twice what they were before the conglomerate announced its buyback plan and 4.5 trillion yen asset selldown in March.The scale of SoftBank’s buyback program has piqued renewed interest among market participants in recent weeks, following reports that senior executives may be preparing for a management buyout.SMBC Nikko Securities Inc. analyst Satoru Kikuchi first mentioned the renewed buyout talks on Sept. 9, pointing to the sale of Arm, which had then yet to be announced, and the mammoth buybacks as signs that Son could be thinking of taking the firm private.Going private is now likely a more alluring prospect for SoftBank after it faced investor flak on news that it had been using derivatives to buy into technology companies.SoftBank Stock Tumbles With Son’s Foray Into Options Trading(Updates with share move in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp. shares soared after the company reached a deal to sell chip designer Arm Ltd. for as much as $40 billion and revived talks about taking the group private.SoftBank’s shares jumped as much as 10% in Tokyo on Monday, the most in about six months. SoftBank announced the sale of Arm to Nvidia Corp. for a combination of cash and stock. The Japanese conglomerate’s senior executives will also be revisiting a plan to buy out public shareholders, which had earlier met with internal opposition, people familiar with the matter said, asking not to be named as the information isn’t public.SoftBank founder Masayoshi Son has considered a management buyout of his company since at least 2015, when talks on financing with an overseas partner fell through. The idea of taking the company private has been fueled by a persistent gap between the company’s market valuation and the worth of its holdings, which include Alibaba Group Holding Ltd. The latest deliberations are at an early stage and may not lead to a transaction. Senior management within SoftBank have various viewpoints on the plan, and many veterans are against the idea, said one of the people.“Despite all the efforts to narrow the discount, none has worked,” said Justin Tang, head of Asian research at United First Partners in Singapore. “A privatization might be the last arrow in Son’s quiver.”SMBC Nikko Securities Inc. analyst Satoru Kikuchi said earlier this month a management-led buyout looks increasingly feasible because of SoftBank’s asset sales and share buybacks.Those advocating for the plan suggest SoftBank would receive much less public scrutiny as a closely held company. SoftBank declined to comment. The Financial Times earlier reported on the internal discussions.SoftBank has been criticized recently for a strategy of using derivatives to invest in technology companies and its executives have met with investors in recent days to assure them that the bets are relatively conservative, people familiar with the matter told Bloomberg on Friday. Media reports revealing details of SoftBank’s derivatives bets upset investors and sparked about a $9 billion loss in market value for the company the first day of trading after the reports.The sale of Arm, which SoftBank acquired in 2016 in its largest deal, will unwind another strategic investment in favor of boosting liquidity and will let Son focus on the more tactical investing he has said he wants to pursue.Nvidia will pay $21.5 billion in stock and $12 billion in cash for the U.K. based-chip designer, including a $2 billion payment at signing. SoftBank may receive an additional $5 billion cash or stock if Arm’s performance meets certain targets, the companies said Sunday in a statement. An additional $1.5 billion will be paid to Arm employees in Nvidia stock.The envisioned sale of Arm -- whose designs underpin the vast majority of smartphone and mobile chip technology -- may draw opposition from rivals. Regulatory approval may take as long as 18 months before the transaction is completed and the deal needs sign-offs from U.K., China, the European Union and the U.S., the companies said.Son owned more than 20% of the conglomerate as of a June 25 filing, according to data compiled by Bloomberg.When Son considered a buyout in 2015, the company’s market capitalization had been brought down by the mounting debt and losses at Sprint Corp. to $65 billion. Since then, Son acquired Arm for about $32 billion, launched the $100 billion Vision Fund and sold the money-losing U.S. wireless operator to a rival. He also offloaded nearly 4.5 trillion yen of assets to pay down debt and buy back 2.5 trillion yen of shars.Valued at about $115 billion by the market before Monday’s rally, SoftBank was trading at a 53% discount to its assets, United First Partners’s Tang said. With roughly 65% of the company’s stock in public hands, that’s an $81 billion price tag even before the premiums are factored in, according to his calculations.“Questions will be asked about the source of funds for such an undertaking, ongoing buybacks notwithstanding,” Tang said. “Son could pledge the stakes in Alibaba and SoftBank Corp., which have very predictable cash flows, for loans. Undertaking a buyout with a private equity fund could allow him to keep doing deals.”(Updates with an analyst’s comments from the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.