Japanese tech giant to sell a $14 billion portion, becoming a minority shareholder as it raises cash 


By Alex Frangos

Billionaire Masayoshi Son's SoftBank Group Corp. said it would sell a $14 billion chunk of its Japanese mobile unit, adding to a string of asset sales aimed at bolstering the company's debt-laden balance sheet.

The sale will lower its stake in the telecom unit, known as SoftBank Corp., to 40% from 62%, ending its position as majority shareholder. It will remain the largest shareholder of the company, which is one of Japan's biggest mobile-phone providers.

The size of the sale came as something of a surprise. While SoftBank had committed this March to selling assets and raising cash, it was already close to meeting its $41 billion target. SoftBank said Friday it was necessary to raise more cash to "ensure flexible options to respond to changes in the market environment."

The telecom unit has been the engine of Mr. Son's success over the past 15 years. SoftBank acquired it from Vodafone Group PLC for $15 billion in a highly leveraged deal in 2006. SoftBank rebranded it and transformed it from an also-ran into a leading telecom provider. A deal to make SoftBank the launch provider of the first iPhone cemented SoftBank's status among Japanese consumers.

The telecom unit went on to become a cash cow for SoftBank, helping to fund Mr. Son's yen for acquisitions. He bought U.S. telecom provider Sprint Corp. in 2013 and U.K. chip maker Arm PLC in 2016. His $100 billion Vision Fund, seeded with money from SoftBank and several Middle East sovereign-wealth funds, became the world's largest and most aggressive technology investors over the past few years.

SoftBank listed a slice of the telecom unit in 2018, in Japan's largest initial public offering ever. It raised $24 billion, money that helped fuel Mr. Son's acquisitions.

Mr. Son eventually ran into trouble. A large bet on office landlord WeWork flopped, requiring a substantial bailout from SoftBank. The Sprint acquisition never performed as expected, and SoftBank earlier this year sold it to rival T-Mobile US Inc.

In March, during the worst of the Covid-market panic, Softbank's shares plummeted and the company announced a major shift in strategy. It would sell stakes in many of its major businesses to raise cash, pay down debt and buy back its shares, which traded at less than 50% of their book value.

Since March, SoftBank has sold or contracted to sell big chunks of its holdings in SoftBank Corp., China's Alibaba Group Holding Ltd. and the merged T-Mobile, raising around $40.5 billion, not including the share sale announced Friday. The Alibaba holding, which started with a $20 million stake in 2000, has been Mr. Son's and SoftBank's most successful investment.

SoftBank is exploring a sale or IPO of Arm, which it bought for $32 billion, The Wall Street Journal reported in July.

The moves have helped push the company's share price sharply higher in recent months. After bottoming in March, SoftBank Group shares have risen 138%, recently hitting their highest levels since the dot-com bubble. It reported net debt of around $94 billion at the end of June, according to FactSet, down from $136 billion a year earlier.

The company said the share sale would take place between Sept. 14 and Sept. 15. It will sell around 929 million shares in SoftBank Corp., with a possible overallotment sale of an additional 100 million shares. The mobile company will remain a SoftBank Group unit and the company has no intention of reducing its stake further, it said. Mr. Son is chairman of both companies.

--Phred Dvorak and Kosaku Narioka contributed to this article.

Write to Alex Frangos at alex.frangos@wsj.com