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SoftBank Founder Boosts Stake In Company To 34%

  • Softbank Group Corp SFTBF SFTBY co-founder Masayoshi Son now owns more than a third of the company he founded after aggressive buybacks in the last two months reduced SoftBank’s outstanding stock by 90 million. 
  • Son’s stake in the company rose to 34.2% as of end-September, up from 26.7% as recently as March 2019, the Financial Times reports.
  • Under Japanese law, Son gains additional rights over asset sales, some buybacks, mergers, and corporate bylaws.
  • Son is closer to the point where he could take SoftBank private. Son could compel other shareholders to sell if he gets 66% ownership, sometimes without paying a premium. 
  • But many oppose a buyout as it would consume management’s attention and trigger a cash crisis.
  • At SoftBank’s current market capitalization, the price of an MBO would be about $50 billion. “He’s not going to have any money left to go out and do the investing that he wants to do,” said Kirk Boodry, an analyst at Redex Research.
  • Privatization could threaten the terms of debt financing for Son personally. Apart from any buyout, Son’s rising influence has aroused governance concerns. Now Son may be less inclined to listen to outside points of view.
  • Son’s finances are also tied up with SoftBank’s stock price in complex ways because of his margin loans. 
  • The buybacks open the company to criticism that Son’s and the company’s interests have gotten jumbled up, said Koji Hirai, president of merger-and-acquisitions advisory firm Kachitas Corp.
  • SoftBank’s cash flow will determine whether Son gets favorable loan terms to finance any MBO. SoftBank’s sale of shares in Alibaba Group Holding Ltd BABASenseTime Group Inc SNTMF, and DoorDash Inc DASH also could quickly support SoftBank’s cash position.
  • Innovator International Developed Power Buffer ETF July IJUL shares closed higher by 0.17% at $23.83 on Wednesday.
  • Price Action: SFTBY shares traded at $21.77 in the premarket on the last check Thursday.

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