Shares of SoftBank Group experienced a significant 5% jump on Wednesday following the announcement that the Japanese tech giant would acquire shares in T-Mobile US valued at approximately $7.59 billion without incurring additional costs. This development emerged as part of an agreement linked to the merger of SoftBank’s U.S. telecommunications arm, Sprint, with T-Mobile.
Late on Tuesday, SoftBank informed T-Mobile US of its intention to receive 48.75 million shares in common stock. This transaction not only enhances the listed assets within SoftBank’s portfolio but also effectively doubles its stake in T-Mobile US to 7.64%, a substantial increase from the current 3.75%. This follows the high-profile public listing of chip designer Arm in September.
Analysts, including Macquarie’s Paul Golding, have noted the positive impact of this move. Golding highlighted that the transaction increases the proportion of listed, quantifiable equity on SoftBank’s balance sheet, improving the ratio of marginable equity relative to indebtedness.
Despite these developments, SoftBank’s shares have seen a modest year-to-date gain of about 14%, underperforming against the nearly 30% rise in the benchmark index. The group currently trades at a discount of approximately 45.5% to the value of its assets, as per Macquarie’s calculations.
SoftBank, led by Masayoshi Son, has faced challenges, notably the bankruptcy of WeWork, once the most valuable U.S. startup. However, the T-Mobile US deal has improved SoftBank’s internal rate of return (IRR) on its Sprint investment to 25.5%.
Other positive developments for the company include the recent surge in Arm’s shares, which closed on Tuesday about 44% higher than its initial public offering price, signaling a potential turnaround for the tech conglomerate.
