Via Financial Times

SoftBank Group explored an audacious attempt to take the Japanese technology conglomerate private over the past week, holding discussions with investors including hedge fund Elliott Management and the Abu Dhabi sovereign investment vehicle Mubadala. 

The talks, which were confirmed by three people with knowledge of them, came as SoftBank founder Masayoshi Son scrambled to revive shares in the Japanese-listed group, which has $55bn in net debt, after a stock market rout last week.

Eventually SoftBank decided instead to move ahead with a plan to sell down about ¥4.5tn ($41bn) in assets to pay down its debt and boost a share buyback to a huge ¥2.5tn ($23bn). That has helped revive SoftBank shares from a four-year low to ¥3,791, up 41 per cent from last week. 

But a potential take-private illustrates the extent to which Mr Son was considering all options to manage the turbulence that rattled SoftBank’s share price and global markets. At the end of last week, SoftBank’s shares had an equity value of around $50bn before any potential premium would have been applied. SoftBank, Elliott and Mubadala declined to comment. 

Mr Son, who already owns a quarter of the company, began thinking about a leveraged buyout after Gordon Singer, who runs the London office of Elliott, expressed interest in buying more SoftBank shares last week as their price fell, according to one person close to the talks. 

During the course of those discussions, these people said, Mr Son began to seriously study the formation of an investor consortium to take SoftBank private. “The idea originated from people around Masa and he wanted to explore it,” one person following the situation said. 

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The discussions also involved some of Mr Son’s key lieutenants, including Yoshimitsu Goto, SoftBank’s chief financial officer, Rajeev Misra, the former Deutsche Bank trader who oversees SoftBank’s Vision Fund, and Marcelo Claure, the company’s chief operating officer. 

The plan was eventually abandoned for a number of reasons, including the complications around getting an investor consortium together quickly for such a large deal, Tokyo-listing rules and other tax considerations, multiple people said. 

Mr Son, a risk-addicted dealmaker, has repeatedly vented his frustration with the public markets, arguing that SoftBank’s equity value is at a steep discount to the value of its holdings, including a roughly $130bn stake in Chinese ecommerce giant Alibaba, a majority stake in the UK chip designer Arm Holdings as well as control of telecom operators Sprint and SoftBank Japan. 

By the end of last week, SoftBank said that discount had stretched to a record 73 per cent, the widest in the company’s history. 

Additional reporting by Simeon Kerr