March 8, 2017 8:36 p.m. ET
Why Is SoftBank Falling After Reports Of ARM Stake Transfer To Vision Fund?
By Shuli Ren
Softbank (9984.Japan/SFTBY) plans to transfer a 25% stake in chip designer ARM Holdings, valued at $8 billion, to its new $100 billion Vision Fund (which is backed by Apple and Saudi Arabia), reports the Financial Times. Softbank bought ARM last July in a deal worth $32.5 billion.
At face value, this can only be good news. Firstly, SoftBank is transferring the 25% ARM stake to the Vision Fund at the same valuation as half a year ago, so it is not selling itself short. Secondly, SoftBank is loaded with debt. An $8 billion cash injection from the Vision Fund could lower its net debt from $72 billion to $64 billion. Third, a 25% stake sale means SoftBank still has majority and managerial control over ARM.
“We think the news is basically neutral for the shares, and is at least not negative,” writes Citi Research.
But SoftBank’s shares fell 1% on Thursday compared to a broadly stronger Nikkei 225.
So why are SoftBank’s shares falling?
The way this blogger sees it, investors are still worried about SoftBank’s debt pile. The Financial Times said that “SoftBank is putting about $25bn into the [Vision] fund — though a portion of that will be covered by the Arm stake.” So SoftBank is this short on cash?!
In addition, Sprint (S) remains a cash drain. Jefferies’ Atul Goyal reported:
The transfer of the ARM stake also opens the Pandora’s box. What other assets will SoftBank unload? Its Alibaba (BABA) shares? Since SoftBank is transferring its assets to its investment partners, chances are, it can’t get the best market valuations.
sig*****
そうなの？ って感じですが…
March 8, 2017 8:36 p.m. ET
Why Is SoftBank Falling After Reports Of ARM Stake Transfer To Vision Fund?
By Shuli Ren
Softbank (9984.Japan/SFTBY) plans to transfer a 25% stake in chip designer ARM Holdings, valued at $8 billion, to its new $100 billion Vision Fund (which is backed by Apple and Saudi Arabia), reports the Financial Times. Softbank bought ARM last July in a deal worth $32.5 billion.
At face value, this can only be good news. Firstly, SoftBank is transferring the 25% ARM stake to the Vision Fund at the same valuation as half a year ago, so it is not selling itself short. Secondly, SoftBank is loaded with debt. An $8 billion cash injection from the Vision Fund could lower its net debt from $72 billion to $64 billion. Third, a 25% stake sale means SoftBank still has majority and managerial control over ARM.
“We think the news is basically neutral for the shares, and is at least not negative,” writes Citi Research.
But SoftBank’s shares fell 1% on Thursday compared to a broadly stronger Nikkei 225.
So why are SoftBank’s shares falling?
The way this blogger sees it, investors are still worried about SoftBank’s debt pile. The Financial Times said that “SoftBank is putting about $25bn into the [Vision] fund — though a portion of that will be covered by the Arm stake.” So SoftBank is this short on cash?!
In addition, Sprint (S) remains a cash drain. Jefferies’ Atul Goyal reported:
The transfer of the ARM stake also opens the Pandora’s box. What other assets will SoftBank unload? Its Alibaba (BABA) shares? Since SoftBank is transferring its assets to its investment partners, chances are, it can’t get the best market valuations.