SoftBank held talks about privatization with Elliott

SoftBank Group investigated a bold attempt to take the Japanese technology conglomerate privately last week, and held talks with investors such as Elliott Management hedge fund and Mubadala, a state-owned investment vehicle in Abu Dhabi.

The talks, confirmed by three people with knowledge of them, took place when SoftBank founder Masayoshi Son tried to revive the shares of the Japanese-listed group with $ 55 billion in net debt after an IPO last week.

Finally, SoftBank instead decided to push ahead with a plan to sell assets of around 4.5 billion yen ($ 41 billion) to pay off the debt and boost share buyback to 2.5 billion yen ($ 23 billion) . This helped revive SoftBank’s stock from a four-year low to 3,791 yen, up 41 percent from last week.

However, a potential take-private shows to what extent Mr. Son has considered all options to deal with the turmoil that shook SoftBank’s share price and global markets. At the end of last week, SoftBank shares had a value of around $ 50 billion before a potential premium would have been applied. SoftBank, Elliott and Mubadala declined to comment.

Mr. Son, who already owns a quarter of the company, started thinking about a leveraged buyout after Gordon Singer, who heads Elliott’s London office, expressed interest last week in buying more SoftBank shares than the price fell, one said Person near the talks.

In the course of these discussions, these people said, Mr. Son had seriously begun examining the formation of an investor consortium to take SoftBank privately. “The idea came from people around Masa and he wanted to explore it,” said one person who followed the situation.

Some of Mr. Son’s key lieutenants also participated in the discussions, including Yoshimitsu Goto, SoftBank’s Chief Financial Officer, Rajeev Misra, former Deutsche Bank trader who oversees SoftBank’s vision fund, and Marcelo Claure, Chief Operating Officer of Company.

The plan was eventually abandoned for a number of reasons, including the complications of quickly putting together a syndicate of investors for such a large deal, rules for listing in Tokyo, and other tax considerations, several people said.

Mr. Son, a risk-addicted dealmaker, has repeatedly expressed his frustration with the public markets, arguing that SoftBank’s stock value is sharply discounted over the value of its holdings, including a majority stake of approximately $ 130 billion in Chinese e-commerce Giant Alibaba stake in British chip designer Arm Holdings and control of telecommunications operators Sprint and SoftBank Japan.

By the end of last week, SoftBank announced that the discount had risen to a record 73 percent, the largest in the company’s history.

Additional reporting by Simeon Kerr

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