Wanted: bold activist to take on Masayoshi Son – Breakingviews:
Masayoshi Son’s SoftBank Group is worth significantly less than the sum of its parts. For an activist investor with plenty of cash and the stomach for a fight, it could be the trade of a lifetime.
Son’s $82 billion tech-to-telecom conglomerate ticks the boxes for pushy shareholders like Dan Loeb’s Third Point Management or Paul Singer’s Elliott Management. There’s poor governance: Son is both chief executive and chairman and makes investments in cash-burning companies like WeWork partly based on his ability to “feel the force”. Performance is weak too. SoftBank shares have returned minus 15% over the past six months, including dividends.
The result is that Son’s company trades at a huge discount to its theoretical asset value. It owns Alibaba shares worth $136 billion. Chipmaker Arm’s value is probably $22 billion, using the price before Son bought it in 2016. Listed stakes in SoftBank’s eponymous Japanese telecom unit and U.S. operator Sprint are worth $19 billion and $43 billion, respectively. Finally, SoftBank touts $36 billion of mostly private holdings, including its share in the Saudi-backed Vision Fund. Add everything up, deduct debt, and SoftBank’s equity should be worth$215 billion – 161% more than its current market value.
Masayoshi Son’s SoftBank Group is worth significantly less than the sum of its parts. For an activist investor with plenty of cash and the stomach for a fight, it could be the trade of a lifetime.
Son’s $82 billion tech-to-telecom conglomerate ticks the boxes for pushy shareholders like Dan Loeb’s Third Point Management or Paul Singer’s Elliott Management. There’s poor governance: Son is both chief executive and chairman and makes investments in cash-burning companies like WeWork partly based on his ability to “feel the force”. Performance is weak too. SoftBank shares have returned minus 15% over the past six months, including dividends.
The result is that Son’s company trades at a huge discount to its theoretical asset value. It owns Alibaba shares worth $136 billion. Chipmaker Arm’s value is probably $22 billion, using the price before Son bought it in 2016. Listed stakes in SoftBank’s eponymous Japanese telecom unit and U.S. operator Sprint are worth $19 billion and $43 billion, respectively. Finally, SoftBank touts $36 billion of mostly private holdings, including its share in the Saudi-backed Vision Fund. Add everything up, deduct debt, and SoftBank’s equity should be worth$215 billion – 161% more than its current market value.
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