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SoftBank Stock Gains on Report It May Go Private. It Has a Huge Winner In DoorDash.
By Eric J. Savitz
Dec. 9, 2020 12:13 pm ET
SoftBank stock got a lift on Wednesday from a report that the Japanese investment company is considering an unusual approach to going private.
According to Bloomberg, SoftBank (ticker: SFTBY) is debating a new strategy to go private gradually, by slowly buying back enough shares until founder and CEO Masayoshi Son has a big enough stake to squeeze out the remaining investors. The company this morning declined to comment on the report.
This isn’t the first time that SoftBank has been reported to be considering going private. The underlying logic of the idea is that the company’s market cap is consistently far below the value of SoftBank’s assets. Earlier this year, SoftBank launched an aggressive program to boost its stock price by selling assets, buying back stock, and paying down debt, and the plan has worked like a charm—SoftBank shares have nearly tripled from their lows earlier in the year.
As of the company’s September quarter, it had sold off $53 billion in assets, and that’s not including the pending sale of the chip design house Arm to Nvidia (NVDA) for about $40 billion. The company has repurchased close to $13 billion in stock so far, including $1.6 billion repurchased in November alone, according to a disclosure by the company on Monday.
According to SoftBank’s own calculations—the company updates its net asset value on its website daily—the stock is still worth less than half of NAV.
Bloomberg posits that under the stealthy go-private plan, SoftBank would slowly continue to buy back shares, gradually increase Son’s holdings on a percentage basis from the current level, now about 27%. The story says that under Japanese securities laws, at 66% he could simply buy back the rest, possibly without paying a premium.
Meanwhile, the SoftBank Vision Fund is going to have one of its best days ever, thanks to the wildly successful debut on Wednesday for the food delivery company DoorDash (DASH). The company priced its initial public offering at $102, and appears likely to open as high as $170. SoftBank invested $2 billion in DoorDash, giving it about a 22% stake after the offering. At a stock price of $170, the position would be worth more than $10 billion.
SoftBank on Wednesday is up 4.3%, to $35.55.