Thanks to an investment of a somewhat small $20 million in 2000, SoftBank happens to own a stake of roughly 30% in Alibaba, a global trade company worth just under $200 billion. Long a valued partner in Alibaba’s operations, Softbank has announced that they will be selling off a little bit of their stock in the commerce giant for the first time since obtaining the stock. In total, they’re looking at getting rid of about $7.9 billion in shares. They will still, of course, be the majority shareholder of Alibaba and their relationship will remain largely unchanged. In their press release, SoftBank explains the details of the deal and their reasons for wanting to trade some of their equity in the company for a substantial bit of free cash flow.
While the move sees SoftBank getting rid of an insanely huge load of shares, their relationship with Alibaba will remain largely unchanged. Although they’re getting $7.9 billion in total out of the deal, thanks to their 30% stake in Alibaba’s near $200 billion worth, they’ll only see their equity in the company dropping to around the 28% mark. Additionally, SoftBank CEO Masayoshi Son will remain a board director for Alibaba, and Alibaba’s executive chairman, Jack Ma, will remain a board director for SoftBank. Alibaba has not yet stated their plans for the returned equity, but it is assumed that it will either be kept on hand for future leverage, or put back into their share market for the mass trading populace to have and to hold. Regardless of any future plans, it’s clear that there are no hard feelings between Alibaba and SoftBank over this deal.
This news comes on the heels of news that SoftBank-owned Sprint is seeing some financial hard times and trying to raise cash, but still wants to participate in the FCC’s upcoming 600MHz spectrum auction. With SoftBank having endured a good amount of loss since acquiring Sprint, it would be no surprise to see them jumping at a chance to help the underdog carrier turn things around. With news breaking recently that Alibaba has fallen under scrutiny by the U.S. Securities and Exchange Commission, SoftBank’s bid for extra cash on hand will see them selling out $5 billion of the stock to any qualified takers, while $500 million will be going to an unnamed firm. The rest will go back to Alibaba for them to release back into the market or keep in their hat.