Vodafone finalises sale of Japanese unit to Softbank |
|
|
Published
:
Sat, 18 Mar 2006 08:05
|
LONDON: Britain's Vodafone Group Plc., the world's largest mobile phones company, has agreed to sell its struggling Japanese unit to Softbank Corp. for 8.9 billion pounds. Softbank will acquire Vodafone's 97.7 per cent stake in Vodafone KK in the next two months, marking the largest acquisition deal by a Japanese company.
Institutional investors and other shareholders hold the remaining stake.
The deal values Vodafone KK at around 1.8 trillion yen ($15.30 billion) including debt and will allow Vodafone to return 6 billion pounds to shareholders, around 10 pence-a-share.
Softbank, which is Japan's largest broadband service provider, is investing 200 billion yen, while its online auction operating unit Yahoo Japan Corporation will bring in 120 billion yen to complete the deal. Softbank said it will have to raise around 1.1 trillion yen to 1.2 trillion yen through a loan to finance the balance fund requirement.
The acquisition will see Softbank as the comprehensive telecom operator in Japan offering broadband, mobile and internet services and content in Japan. It has recently secured a licence to operate mobile phone services.
Vodafone expects to incur an impairment charge of around 4.9 billion pounds in its results for the year ending March 2006 as a result of the sale.
Chief executive Arun Sarin said the price was attractive and he hoped it would enhance the company's adjusted earnings per share. He said the company wants to put capital where it can create superior returns in markets offering a strong local position. "In the case of Japan, we have been making progress on the turnaround in recent months. However, given the relative competitive position of the business, the reduced prospects for superior long term returns and a good offer from Softbank, the board took the decision to sell," he said.
Though the Japanese unit had been the third largest cellular service provider in that country with 15 million subscribers, the business has been struggling for some time as 3G sales have remained flat and the company has been losing customers at record rates. The unit has been weighing on the company's shares for some time.
Vodafone had apparently done hard bargaining as the earlier price quoted was around 8 billion pounds. It was helped in the efforts by speculation that a U.S. firm, Cerberus Partners and Providence, too is vying for the Japanese unit.
Vodafone shares rose 2.75 pence to 132.75 pence in early trading.
|
|
|
|
|
|
Print this Story
Vodafone, BT help FTSE 100 to gain 