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SoftBank tightens grip on Yahoo Japan via $2 billion deal with Altaba

Reuters  |  TOKYO 

By Sam Nussey

(Reuters) - Group is increasing its stake in Yahoo through a $2 billion, three-way deal with U.S. firm to deepen ties with the heavyweight ahead of an IPO of its telecoms unit.

The transaction, with just $9 million net investment by SoftBank, allows it to boost ownership of Yahoo without pressuring its already strained balance sheet. It also leaves SoftBank's domestic telecoms unit with a 12 percent stake in Yahoo Japan, highlighting for investors the two companies' ties ahead of its planned listing.

In the case of Altaba, formerly called which also owns about 15 percent of Chinese Alibaba Group, the deal helps monetize some of its investment in the joint venture it set up with in 1996.

And for Yahoo Japan, the deal could strengthen ties with its biggest shareholder and help to assuage concerns of investors who have seen its shares tumble this year. Yahoo Japan's shares ended 11.4 percent higher in on Tuesday.

SoftBank announced on Tuesday it will buy 221 billion yen ($2 billion) of Yahoo shares from will then buy back 220 billion of stock from SoftBank.

As a result of the transaction, SoftBank's stake in will rise to 48.17 percent from 42.95 percent.

SoftBank said in a statement the deal will strengthen cooperation between the company, one of Japan's big three telecoms firms, and Yahoo Japan, an heavyweight in areas such as and shopping.

The synergies between SoftBank and are "consistent with SoftBank Group's broader strategic synergy group initiative," SoftBank said in the statement.

SoftBank and its Vision Fund, the world's largest private equity fund standing at over $93 billion as of May last year, have been taking minority stakes in companies around the world that Son believes will come to dominate their respective fields.

UNIT'S IPO

SoftBank is preparing to list its domestic telecoms unit in what could be the largest Japanese IPO in nearly two decades.

Yahoo Japan could use SoftBank's to boost demand for and mobile payments among Japan's 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 Japan is one of Japan's most successful companies, with its services from earthquake alerts to to weather forecasts ubiquitous in the lives of many consumers.

But its investment plans to fend off competition from rivals such as and new upstarts such as have weighed on its shares, which are down more than 22 percent this year.

"It's clear that using excess funds for share buybacks is the only way Yahoo Japan has to hold up its share price," said Yasuo Sakuma, at The firm does not hold positions in Yahoo Japan or SoftBank.

has been selling down its Yahoo Japan stake. Two Altaba appointments to Japan board will step down as a result of the transaction announced on Tuesday.

SoftBank shares ended up 2.1 percent on Tuesday, with the benchmark index finishing around 0.7 percent higher.

($1 = 111.0000 yen)

(Reporting by Sam Nussey; Additional reporting by Chris Gallagher and Tomo Uetake; Editing by and Muralikumar Anantharaman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, July 10 2018. 16:13 IST
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