In an unexpected turn of events, SoftBank Group Corp has landed a windfall, securing T-Mobile US shares valued at a staggering $7.59 billion without additional expense. This announcement catapulted the Japanese conglomerate’s shares by an impressive 5%.
The conglomerate, helmed by Masayoshi Son, disclosed late Tuesday that as per the terms outlined in the merger deal between SoftBank’s U.S. telco Sprint and T-Mobile, T-Mobile US would grant them 48.75 million common stock shares. This move significantly amplifies SoftBank’s listed assets, amplifying its T-Mobile US stake from the current 3.75% to a robust 7.64%, following the notable listing of chip designer Arm back in September.
“This upsurge amplifies the measurable equity share on SoftBank Group’s balance sheet and notably augments the proportion of marginable equity against the debt,” remarked Macquarie analyst Paul Golding in a note to clients.
The news sparked a significant surge in SoftBank’s shares, poised to mark their most substantial increase in over a month. Despite the conglomerate’s modest 14% rise year-to-date, significantly trailing the almost 30% surge in the benchmark index, it continues to trade at a discount of approximately 45.5% relative to the value of its assets, as per Macquarie’s calculations.
While Son has been a prominent backer of late-stage startups, his track record witnessed setbacks, notably with the downfall of office-sharing firm WeWork, once hailed as the most valuable U.S. startup.
With this unexpected windfall from the T-Mobile US transaction, SoftBank’s internal rate of return on its Sprint investment now stands at an impressive 25.5%.
The company also enjoys other favorable factors, including the recent upswing in Arm’s shares, which closed nearly 44% above the initial public offering price by Tuesday’s end.