SoftBank soars on Spirit takeover
Shares in Japanese mobile carrier Softbank soared 10 per cent in Tokyo today as investors piled back into a stock that has been pounded since news of its $US20 billion ($19.59 billion) takeover of Sprint Nextel emerged.
In early trade, the shares were 10.05 per cent higher at 2496 yen ($31.69).
The ambitious cross-ocean marriage would see SoftBank acquire 70 per cent of Sprint Nextel, the third-biggest US mobile firm behind AT&T and Verizon Wireless, by the middle of next year.
Investors dumped the shares on Friday as SoftBank confirmed its was in talks with Sprint.
Concerns about how it would finance the purchase and the strategy behind the monster deal pushed Softbank stock down 17 per cent and then another 5.3 per cent on Monday before the deal was confirmed.
Today's spike may be largely driven by bargain hunters looking to pick up the embattled stock on the cheap.
"Now that the deal is official, some share buyback momentum is likely," said a senior strategist at a Japanese brokerage.
Chief executive Masayoshi Son, a well-known tech entrepreneur and Japan's second-richest man, acknowledged yesterday that his firm was jumping into the US mobile market where it has no foothold or experience, and taking over a heavily indebted firm that lost $2.89 billion last year.
Moody's and Standard & Poors both put SoftBank's credit rating under review for a possible downgrade, saying it would heap pressure on an already debt-heavy balance sheet.
The agreement catapults SoftBank, little known outside Japan, to third spot globally among cellular firms after China Mobile and Verizon.
While the deal has raised eyebrows among some analysts and investors, Credit Suisse analyst Hitoshi Hayakawa said it may prove to be an astute move.
"This has the potential to transform the SoftBank Group into a behemoth straddling Japan, the US, and Asia," he told Dow Jones Newswires.
"This opening for industry realignment on a historic scale presents a excellent opportunity to invest."
