Shulou(Shulou.com)11/24 Report--

Masayoshi Son, founder of Softbank Corp. Group, quietly tightened control of the company during the stock market downturn, bringing him closer to the level at which he could bid to privatize the world's largest technology investor.

Son's aggressive buyback strategy has reduced the company's outstanding shares by nearly 90 million shares in the past two months, bringing son's current stake in Softbank Corp. to more than 1/3. According to media calculations and confirmation by Softbank Corp., son's current stake in Softbank Corp. has risen to 34.2% from 32.2% at the end of September this year. In March 2019, son's shareholding was only 26.7%.

Under Japanese law, son will be given additional rights if his shareholding exceeds 1/3. The 65-year-old billionaire will have the right to veto any special decisions submitted by activist investors to shareholders, giving him more control over asset sales, partial buybacks, mergers and acquisitions and articles of association.

At the same time, the increase in shareholding also makes it possible for son to achieve his goal of privatizing Softbank Corp., an idea he has discussed many times within the company. One long-debated option for privatisation is the "slow-burn" strategy, which gradually buys back shares until the founder has enough shares to crowd out the rest of the investors. Under Japanese regulations, if Mr son owns a 66 per cent stake in Softbank Corp., he can force other shareholders to sell shares and in some cases do not have to pay a premium.

"Softbank Corp. cannot find a reason why he should be listed," said Satoru Kikuchi, a senior analyst at Nikko Securities at SMBC in Japan. He said that Softbank Corp. can raise the necessary funds without listing, without restrictions and costs of listed companies. "listing is not suitable for Softbank Corp. 's current business model."

A person familiar with Mr. son's thinking revealed that if he could afford it, he would privatize the company. But another person familiar with the matter said many of Mr. son's lieutenants opposed privatisation because it would be a huge financial commitment that would drain management's attention and leave the company short of cash to make acquisitions and investments.

Assuming son needs to buy a 2/3 stake in Softbank Corp., at Softbank Corp. 's current market capitalization, the price of a management buyout (MBO) is about $50 billion, about twice what it was when Michael Dell took Dell private in 2013. Softbank Corp. 's cash flow will determine whether son can get favorable loan terms to finance any MBO deal. In addition, other asset sales that could quickly boost Softbank Corp. 's cash position include the company's holdings in Alibaba Group, Shangtang Technology and takeout company DoorDash.

Softbank Corp. 's privatization process also depends to some extent on the initial public offering (IPO) of ARM, Softbank Corp. 's chip design subsidiary, next year. Softbank Corp. hopes to seek a valuation of up to $60 billion for ARM at IPO, almost twice as much as it did when it was acquired in 2016. If this valuation can be obtained, such a return will not only fund Softbank Corp. 's investment machine, but also open the way to privatisation.

Mr Kikuchi points out that privatisation "is not something that will happen tomorrow". But if you're talking about next year or the year after next, it seems credible. " He said.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.