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Softbank¡¦s New Strategy: The Largest LBO in Japan  
 
Product Ref: 09/399C Company: Softbank

Product Type: Case Industry: Software & Services
Telecommunication Services

Related Product(s): Teaching Note
Authors: Mitsuru Misawa   
On 17 March 2006, Japanese Internet company Softbank Corp announced that it had reached a final agreement with British cellular phone giant Vodafone Group Plc to buy its Japanese unit, Vodafone K.K. for ¢D1.75 trillion. To finance the largest business acquisition ever by a Japanese firm, Softbank intended to raise between ¢D1.1 trillion and ¢D1.2 trillion through leveraged-buyout (¡§LBO¡¨) financing, using Vodafone K.K.¡¦s assets as collateral .

With the acquisition of Vodafone K.K., Softbank aimed to build a multilateral communications business, integrating news, video and other online content with Vodafone¡¦s cellular and fixed-line services. But first Softbank had to borrow between ¢D1.1 trillion and ¢D1.2 trillion to finance its purchase. The sum was the largest ever to be raised for a buyout by a single Japanese company.
Functional Area : Finance & Investments
Strategy & General Management

Issues: Can Softbank maintain its culture, structure, and ability to respond quickly and effectively to client needs throughout the acquisition? Second, should antitrust considerations preclude the deal? Can Softbank in fact raise the necessary funds to effect this acquisition? Is Softbank's claim of "synergy" no more than an opportunity to lop off overlapping operations? Third, and perhaps the biggest question of all, can this acquisition work as a serious and positive strategy, or is it merely a defensive tactic to eliminate Softbank¡¦s most troublesome and dangerous competitors? The top management of Softbank must answer these questions clearly to outsiders, including its shareholders.
Length: 22 pages Country: Japan

Pub. Year: 2009 Level of Difficulty: 2
         
This product type is available in the following language(s):      English
         
Related Information: N/A
 
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