SoftBank Group deepens investment in Yahoo Japan by $2 billion

The 3-way deal, ahead of SoftBank’s planned listing of its domestic telecoms unit – likely to be the largest Japanese IPO in nearly two decades, could boost demand for online shopping and mobile payments among Japan’s tech-savvy shoppers.

In a move that sees Japan’s SoftBank Group tightening its grip over Yahoo Japan, the conglomerate disclosed that it has increased its stake in Yahoo Japan with an investment of $2 billion.

The three-way deal sees the Softbank Group buying Yahoo Japan’s shares worth $2 billion (221 billion yen) from Altaba. In turn, Yahoo Japan will buyback stocks worth 220 billion yen from SoftBank.

As a result, SoftBank’s stake in Yahoo Japan will rise to 48.17%, up from 42.95% with just a $9 million in net investments. Altaba, Yahoo Japan’s second largest shareholder, will have a stake of 27% and end its joint venture partnership with Yahoo Japan.

On Tuesday, in a statement, SoftBank said the deal will strengthen cooperation between the two company in areas including shopping and news. Further, the synergies of the deal are “consistent with SoftBank Group’s broader strategic synergy group initiative,” said Masayoshi Son, SoftBank’s CEO in a statement.

As of 2017, SoftBank Vision Fund, the world’s largest private equity fund stood more than $93 billion. SoftBank has been using it as a vehicle to take minority stakes in technology companies around the world that its CEO believes could potentially peak in their respective fields.

The news comes ahead of SoftBank’s planned listing of its domestic telecoms unit in what is likely to be the largest Japanese IPO in nearly two decades.

Yahoo Japan use SoftBank’s telecom services could boost demand for online shopping and mobile payments among Japan’s tech-savvy shoppers. Through Yahoo Japan and others, SoftBank is offering its mobile users an increasingly wide range of top-up services in addition to a basic phone subscription.

With the news reaching the market, shares of Yahoo Japan rose by nearly 12% in early afternoon trading in Tokyo. However, despite this rise, Yahoo Japan’s shares are down by more than 22% in 2018.

“It’s clear that using excess funds for share buybacks is the only way Yahoo Japan has to hold up its share price,” said Yasuo Sakuma, chief investment officer at Libra Investments, a firm which does not have any position in either SoftBank or Yahoo Japan.

As a result of deal, Altaba has been selling down its stake in Yahoo Japan.. Two of its directors in Yahoo Japan’s board will be stepping down on Tuesday.

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