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By Anirban Sen, Joshua Franklin and Sabahatjahan Contractor
(Reuters) – SoftBank Group Corp executives had early talks about taking the Japanese tech giant private as the company seeks new strategy after divesting several large assets, according to a person familiar with the matter.
Discussions stem from frustrations over the continued discount in SoftBank's stock valuation compared to the value of its individual holdings, which continues even after an asset sale program attempts to fill that void. The source requested anonymity as the discussions are private.
The deliberations are at a very tentative stage and SoftBank management disagrees on whether or not to continue the deal, the source warned, adding that this is not the first time SoftBank executives have had such discussions to have.
A spokeswoman for SoftBank, which is run by billionaire Masayoshi Son, declined to comment. News of the talks was first reported in the Financial Times.
SoftBank's shares on the Tokyo Stock Exchange are down a little more than 10% through 2020 and are trading at 1,307.50 yen. That's a steeper drop than Japan's and below the 1,500 yen price it sold units for when it went public in 2018.
The IPO, still Japan's largest public listing to date, was widely viewed at the time as the completion of the group's transition from a domestic telecommunications company to a global technology investor.
Since then, SoftBank has faced a number of challenges, including losses on its $ 100 billion investment in its Vision Fund, activist pressures from Elliott Management hedge fund, and questions about major option purchases during the recent run-up to the US equity market.
Talks about privatizing SoftBank have also come because SoftBank has changed its business strategy to become a long-term investor in companies rather than a manager of companies.
SoftBank's recent investment track record has been reviewed, including a big bet on shared office provider WeWork. This resulted in SoftBank reporting a loss of $ 18 billion to the Vision Fund in May, causing the conglomerate to record a record loss.
SoftBank announced on Monday that it had agreed to sell the British chip designer Arm to Nvidia (NASDAQ 🙂 Corp for up to $ 40 billion in cash and shares.
It is possible that go-private talks could gain momentum after the guns sale, the source said.
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