June 22, 2020
SoftBank Group Corp. is unloading part of its stake in T-Mobile US Inc. in a transaction valued at about $21 billion. The deal involves as many as 198.3 million T-Mobile shares owned by SoftBank, with T-Mobile stock having closed at $106.60 before the announcement. The sale fits within a broader $42 billion asset-disposal push designed to finance stock buybacks and reduce debt. SoftBank also planned to sell a 5% stake in its Japanese wireless subsidiary. That is the uncomfortable logic of leverage: even attractive assets can become sources of liquidity when the balance sheet demands it.
Masayoshi Son was acting after steep losses in SoftBank’s investment business, including writedowns tied to Vision Fund investments such as WeWork and Uber Technologies Inc. The Vision Fund had triggered a record 1.9 trillion yen, or roughly $18 billion, loss in the prior fiscal year. SoftBank had already completed a $4.7 billion share buyback program in just three months. Its shares rose as much as 3% in Tokyo after the T-Mobile transaction was announced. For investment banking interviews, this is exactly the kind of situation where candidates should connect strategy, capital structure and shareholder returns rather than treating the sale as a simple block trade.
The mechanics were not simple. T-Mobile planned a public offering of 133.5 million common shares and said it would grant underwriters another 10 million shares. T-Mobile also intended to sell as many as 30 million common shares to a Delaware statutory trust. Five million shares were set to be sold to an entity controlled by Marcelo Claure, a SoftBank executive and T-Mobile board member, with funding from SoftBank. Big exits rarely happen as a single clean block when voting rights, market capacity and strategic relationships all matter.
T-Mobile also received the right to buy almost 20 million shares. SoftBank had only recently secured the T-Mobile stake after U.S. regulators approved T-Mobile’s $26.5 billion takeover of Sprint Corp. T-Mobile’s market value was about $132 billion, and its stock had risen 36% for the year through the prior close. Deutsche Telekom AG was already the controlling shareholder of T-Mobile because of the voting-rights structure after the Sprint deal. The irony is sharp: SoftBank helped create the combined wireless platform, then quickly had to monetize a large piece of it.
The offering was due to trade on June 24 and was overseen by Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc., JPMorgan Chase & Co., Barclays Plc, Bank of America Corp., Deutsche Bank AG and Mizuho Financial Group Inc. PJT Partners served as financial adviser to T-Mobile’s board. SoftBank said it would pay T-Mobile $300 million as part of the transaction and cover all fees and expenses related to the deal. SoftBank also said it needed to enhance cash reserves because of concerns about further waves of Covid-19 spread. The lasting lesson is that asset sales are not merely defensive moves; in stressed moments, they become tests of judgment, timing and financial discipline.