So what is Masayoshi Son up to this time?
(ticker: JP.9984) on Friday made the surprise announcement that it plans to sell about a third of its stake in
(JP.9434), a Japanese wireless communications company, in an underwritten stock offering. That will reduce the parent company’s stake in the telco to about 40%, from 62%. At
recent stock price and at current exchange rates, the stock sale would raise about $13.5 billion.
Group announced plans to sell ¥4.3 trillion of assets (now about $41 billion), targeting the proceeds for debt repayment and stock buybacks. As of the company’s most recent earnings report, SoftBank had completed 95% of the targeted asset sales, by reducing its stakes in
T-Mobile US (TMUS)
and Alibaba Group Holding (BABA), and by the previous sale of some SoftBank Corp. shares.
The parent has already repurchased $9.5 billion of stock, with plans to buy back another $14.2 billion.
SoftBank’s explanation for the stock sale amounts to planning for a rainy day. “In light of the ongoing uncertainty in the market environment due to concerns about a potential second or even third wave of Covid-19, SoftBank Group believes it is necessary to expand cash reserves” beyond the previous asset-sales program “to ensure flexible options to respond to changes in the market environment.”
The company adds that it doesn’t plan to sell more shares in SoftBank Corp. It said the holding remains important in strategic terms, and that it will hold the remaining position “for the medium to long term.”
The more important question is what Softbank and its founder and CEO intend to do with the cash. “Changes in the market environment” could allow the company to opportunistically make acquisitions.
There has been recent speculation that the company could get involved in the bidding for TikTok, the short-video service owned by China-based ByteDance, which is a SoftBank Vision Fund portfolio company.
Meanwhile, the company recently confirmed that it is looking at options for the full or partial sale of the U.K. chip-design house Arm. That could bring the company $40 billion or more.
The potential here is that Son could suddenly find himself with $50 billion to spend. The possibilities are vast. He could buy back even more stock, boost the cash pile further by selling part of the company’s Alibaba stake, and simply take SoftBank private. He could ramp up his investments in public equities, as the company did in the June quarter.
The company isn’t commenting beyond the press release.
SoftBank shares on Friday were up 0.7%, to $30.96. In Tokyo trading, SoftBank Corp. shares fell 1.6%, to ¥1,431.50. The
was up 0.3%.
Write to Eric J. Savitz at [email protected]