SoftBank Group Corp announced a significant windfall, stating it would be granted T-Mobile US shares valued at approximately $7.59 billion with no additional cost. The news prompted a 5% surge in the Japanese conglomerate’s shares.
The conglomerate, led by Masayoshi Son, disclosed on Tuesday that it had instructed T-Mobile US to issue 48.75 million shares in common stock to SoftBank Group Corp. The issuance was a result of conditions outlined in an agreement related to the merger of SoftBank’s U.S. telecom company, Sprint, and T-Mobile.
This strategic transaction enhances SoftBank’s listed assets, effectively doubling its stake in T-Mobile US from the current 3.75% to 7.64%. The move follows the successful listing of chip designer Arm in September.
Macquarie analyst Paul Golding commented, “This increases the proportion of listed, measurable equity in hand on (SoftBank Group’s) balance sheet, and, even better, proportions of marginable equity relative to indebtedness.”
SoftBank’s shares experienced their most significant gain in over a month, rising approximately 5%. Despite a 14% year-to-date increase in the conglomerate’s shares, the performance lags behind the benchmark index’s nearly 30% rise. Macquarie calculations indicate that the group trades at a discount of around 45.5% to the value of its assets.
Masayoshi Son, known for his investments in late-stage startups, has faced challenges, including the WeWork bankruptcy, once the most valuable U.S. startup. The T-Mobile US transaction has raised SoftBank’s internal rate of return (IRR) on its Sprint investment to 25.5%.
Additional positive factors for the company include the recent surge in Arm’s shares, closing around 44% above the initial public offering price as of Tuesday.