SoftBank Group Corp (OTCMKTS:SFTBY) is could reportedly sell a proportion of its stake in T-Mobile (NYSE:TMUS) for around $20 billion. Goldman Sachs and Morgan Stanely are expected to underwrite the offering.
Softbank to sell part of its 25% stake in T-mobile
According to sources familiar with the matter, this is in a bid to accelerate efforts of raising capital amid losses in the company’s investment business. The company is in discussion to sells back its stake to T-Mobile’s parent company Deutsche Telekom. The sources indicate that that the sales will involve a secondary offering for a significant part of the stake. SoftBank currently owns around 25% interest in T-Mobile US, and it is planning to sell part of the interest to Deutsche Telekom, which will make the Germany company the majority owner.
Talks are still on-going, and a deal could be finalized this week according to a source. Nothing has been finalized, and with negotiations on-going, the deal could fall apart or change. Currently, T-Mobile is valued at $126 billion, and Softbank holds a stake of around $31 billion in the company. Interestingly SoftBank could retain rights of around 48.8 million shares that it surrendered to finalize the merger should the .stock of T-Mobile hit certain milestones in the next two years
SoftBank dealing with huge losses
The founder of Softbank, Masayoshi Son, got the stake in T-Mobile following approval from regulators to sell Sprint to its rival. He is currently trying around $42 billion of assets in a bid to raise cash to pay the debt and buy back shares. Masayoshi has other prime assets that include Japanese wireless enterprise SoftBank Corp and Alibaba Group Holdings.
The move to sell comes on the day the company reported annual losses of around $13 billion from its main business as well as $18 billion from venture arm Vision Fund. The company had created the $100 Vision Fund to take risks by investing in innovative companies by offering them capital. However, the company took a hit from the failed WeWork IPO and the coronavirus pandemic that has significantly affected businesses.