Signage at a SoftBank Corp store. in the Ginza district in Tokyo, Japan, on Wednesday, November 1, 2023.
Kiyoshi Ota | Bloomberg | Getty Images
Shares of SoftBank Group rose 5% on Wednesday after the Japanese technology giant said it would receive shares in telecommunications company T-Mobile US worth about $7.59 billion at no additional cost.
Masayoshi Son's conglomerate said late Tuesday that it had ordered T-Mobile US to issue 48.75 million common shares to it after meeting the terms of an agreement as part of the merger of SoftBank's U.S. telecommunications company Sprint and T-Mobile .
The deal bolsters listed assets in SoftBank's portfolio, doubling its T-Mobile US stake to 7.64% from its current 3.75%, following chip designer Arm's blockbuster listing in September.
“This increases the proportion of listed, measurable equity on (SoftBank Group's) balance sheet and, even better, the proportion of marginable equity relative to debt,” Macquarie analyst Paul Golding wrote in a note to clients.
SoftBank shares have gained only about 14% since the start of the year, compared with a nearly 30% gain for the benchmark index. According to Macquarie calculations, the group is trading at a discount of around 45.5% to the value of its assets.
Son was a leading investor in late-stage startups but suffered a series of setbacks, including the bankruptcy of office-sharing company WeWork, once the most valuable U.S. startup.
The T-Mobile US transaction increases SoftBank's internal rate of return on its Sprint investment to 25.5%.
Another positive for the company is the recent rally in Arm shares, which closed about 44% above the market price on Tuesday.