SoftBank Continues To Be Valued At An Unwarranted Discount
What Softbank's Stock Price Tell Us About Alibaba's Valuation (And Why It Makes Yahoo Look Even Cheaper)
Jeremy Raper • 19 Comments
Jeremy Raper • 19 Comments
SoftBank: For Exposure To Alibaba, Look To Tokyo, Not Sunnyvale
Helix Investment Research • 31 Comments
Helix Investment Research • 31 Comments
Mon, May 23, 11:10 AM
- Tencent (OTCPK:TCEHY +0.5%) is in early-stage talks to take over SoftBank's (OTCPK:SFTBY +1.9%) majority position in Finnish mobile-game maker Supercell, The Wall Street Journal reports.
- Supercell makes popular combat simulator Clash of Clans, and SoftBank took majority control with a $1.53B investment in 2013, before growing its stake last year to 73%.
- Also last year, Alibaba (of which SoftBank is the biggest shareholder) teamed up with China's Giant Interactive Group to talk about taking control of Supercell, though price has hung up those discussions. And Supercell is said to prefer having autonomy under SoftBank's umbrella.
- Sources say that Supercell was valued about $5.25B last year. Its most recent game, Clash Royale, was the top-grossing mobile game for March with more than $80M.
- Now read Tencent: Like Buying Facebook At A Bargain »
Thu, May 12, 11:35 PM
- Alibaba (NYSE:BABA) and SoftBank (OTCPK:SFTBY) have teamed up on a joint venture -- SB Cloud Corp. -- to launch cloud computing services in Japan.
- The venture will use technologies and solutions from the Alibaba Cloud unit and open a new data center in Japan. Alibaba's cloud experience will combine with an extensive customer base at SoftBank.
- The two will offer services ranging from data storage and processing to enterprise middleware and security service.
- SoftBank is Alibaba's largest shareholder; it will have a 60% stake in the venture, with Alibaba holding the rest.
- SoftBank shares are down 2.4% in Tokyo at midday.
- Now read The Gaps In Chanos' Short Position In Alibaba »
Fri, Apr. 22, 7:14 PM
- Yahoo (YHOO -0.5%) and advisers are set to spend the weekend narrowing down more than 10 first-round bids for its core business, ranging from $4B-$8B, Bloomberg reports -- with an eye to moving forward as soon as next week.
- They'll aim for about seven finalists and plan to offer them increased access to internal docs and management.
- The higher-end bids reportedly came from bidders who haven't spent as much time with Yahoo, which should lead to more scrutiny into the structure of the offers.
- In addition to the known bidders (that hadn't denied reports) -- Verizon (VZ +1%), YP Holdings, TPG, and Bain/Vista Equity Partners -- one or two other strategic firms were involved.
- Echoing earlier reports, SoftBank (OTCPK:SFTBY +3.4%) isn't in the bidding but is likely eager to talk with anyone who also wants the Yahoo Japan stake.
- Despite the progress, a final decision is likely at least a month away.
- Now read Yahoo Sale Could Reboot Online Ad Competition »
Wed, Apr. 20, 10:59 AM
- With Yahoo's (YHOO +3%) first-round bid shortlist out, where was Daily Mail & General Trust (OTCPK:DMTGY)? The operators of the world's most-visited English-language website were a prominent late arrival to the Yahoo bidding scene, but took a back seat (joined by IAC, Comcast and Time Inc.) to Verizon, YP, Rakuten and private equity.
- Daily Mail now says it didn't put a bid in with Yahoo by Monday's deadline, but it is in talks with parties interested in Yahoo. The publisher is up 0.6% in London.
- Yahoo's process may become a full-fledged saga for 2016. Not only is the existing sale process quite likely to run into June, but secondary interest in the resulting asset mix from the likes of Alibaba (BABA +0.7%), SoftBank (OTCPK:SFTBY -0.1%) and Daily Mail could mean even more transfers of businesses ahead.
- Alibaba had a strong (if less dramatic) case to become a dark horse, since it may have been able to pull off the functional equivalent of a highly tax-advantaged buyback.
- Now read Yahoo: Who's Ready To Take On A Legacy Digital-Native Media Turnaround? »
Tue, Apr. 19, 8:39 PM
- Yahoo (NASDAQ:YHOO) didn't say anything about its sales process during its Q1 earnings webcast, and swore off giving any updates along the way.
- But speculation about the shortlist is mostly on the mark, according to the latest from Reuters, which says Verizon's (NYSE:VZ) there (with help from Guggenheim, LionTree, Allen & Co.), along with Yellow Pages owner YP -- which has backing from AT&T (NYSE:T) on the bid, sources said.
- Japanese online retailer Rakuten (OTCPK:RKUNY) is a new name that's kicking tires as well. Among private equity, Apax Partners, TPG, Bain Capital, Apollo Global Management (NYSE:APO) and Warburg Pincus are all accounted for, and may be allowed to team up in round 2.
- No two offers were identical, sources said, so Yahoo now must look at the structures, assets and offers to sort out value -- hopefully in time to wrap up in June.
- SoftBank (OTCPK:SFTBY) and Alibaba (NYSE:BABA) aren't taking part -- but they could get involved with the company after the fate of its core assets is settled.
- YHOO wrapped an after-hours session up 1.1%.
- Now read Yahoo: Who's Ready To Take On A Legacy Digital-Native Media Turnaround? »
Tue, Feb. 23, 2:42 PM
- After several months of overtures, Warner Bros. (TWX +1%) is acquiring Korean streaming-video provider DramaFever from SoftBank (OTCPK:SFTBY +0.6%), which paid $100M for the service in late 2014.
- “This is a great fit for Warner Bros.,” says Warner's Craig Hunegs, who says DramaFever “will move quickly with our own distribution and creative teams to create and build more OTT services.”
- Terms weren't disclosed, and the deal's expected to close in Q2. DramaFever co-founders Seung Bak and Suk Park are sticking around to run things, and the company will operate under its own brand and remain in New York.
- Previously: Warner Bros. bidding for control of SoftBank's DramaFever (Jul. 17 2015)
Tue, Jan. 12, 9:19 AM
- Wang Jianlin -- China's richest man -- and his Dalian Wanda Group have bought U.S. studio Legendary Entertainment for $3.5B, becoming the first Chinese company to own a major Hollywood studio.
- In turn, Wang says he'll package Legendary (producer of tentpole hits including Jurassic World, Batman Begins, The Dark Knight and Man of Steel) with existing production assets in China and float the operation in an IPO there.
- "Wanda Cinema already has made tremendous development in China, but it isn't enough," said Wang at a news conference. "Movies are global, and our company certainly wants to add our voice to the world film market."
- The company had already become the world's biggest movie theater operator after buying AMC Entertainment in 2012 for $2.6B.
- Wanda's deal meant buying out the stakes of non-management investors, including SoftBank (OTCPK:SFTBY), which last fall agreed to pay $250M for 10% of the studio, with a right to invest an additional $750M.
- Founder/CEO Thomas Tull will continue to run daily operations "the way we always have." Wang dismissed the idea that pictures would now be censored or altered: "I'm a businessman ... I buy things to make money, so I don't really think about government priorities. My main consideration is commercial interest."
- Previously: Reuters: China's Wanda buying control of Legendary Entertainment (Jan. 04 2016)
Mon, Jan. 4, 9:05 PM
- China's Dalian Wanda Group has sealed a deal to take a majority stake in U.S. movie studio Legendary Entertainment that values the company at $3B-$4B, Reuters reports.
- The move means that other Legendary investors, particularly including SoftBank (OTCPK:SFTBY) as well as Waddell & Reed, are selling their stakes.
- Wanda will control a bit more than half of Legendary, known for producing tentpole movie hits including hero films Batman Begins, The Dark Knight and Man of Steel as well as 2015's No. 2 movie, Jurassic World. The rest of Legendary will be held by management, including founder/CEO Thomas Tull.
- Wanda is the top shareholder in China's biggest theater chain, Wanda Cinema Line, and it acquired North America's No. 2 chain, AMC Entertainment, in 2012. Meanwhile, Legendary already has an agreement with China Film Co., the country's biggest film company, to co-produce films.
- Last fall, SoftBank agreed to pay $250M for nearly 10% of Legendary, with a right to invest an additional $750M over several years.
Jul. 17, 2015, 1:50 PM
- Warner Bros. (TWX -2%) is reportedly again competing to bid for DramaFever, an online video distributor of South Korean soap operas that SoftBank (OTCPK:SFTBY) paid $100M for in October.
- Warner was among the bidders that were part of the fall sale, and acquiring control of DramaFever could speed up its own over-the-top service plans. SoftBank plans to keep a significant minority stake in the service.
- The site -- which provides South Korea's soap operas with subtitles for a largely U.S. audience -- operates with a Hulu-like model, and like Hulu has recently been focusing on its subscription side.
- During SoftBank's ownership, traffic to the site has tumbled nearly by half, to May's 1.18M unique visitors, though that measure doesn't count streamers such as Rokus or Apple TVs, and only accounts for some mobile viewing.
Jun. 5, 2015, 8:50 PM
- With T-Mobile and Dish Network talking about a tie-up that many agree makes sense, what about Sprint (S -0.8%), the struggling provider who's set to drop to fourth place in customer base?
- T-Mobile and Dish could take advantage of Dish's large spectrum holdings to amp up the wireless network and add a growth engine to a satellite business in decline. AT&T is already pursuing its own satellite combination, with DirecTV. Verizon's moving into mobile video, but it will need more spectrum sooner or later.
- Sprint, for its part, has large spectrum holdings but has had trouble building it out and holding on to customers. And with a cash burn problem, "it's running out of good options," says industry analyst Craig Moffett.
- Sprint could try again to get T-Mobile for itself. That idea fell apart before on regulatory concerns, but will the climate have changed (or will it if the two wait until after the 2016 presidential election)?
- If T-Mobile goes to Dish or another acquirer -- while Softbank (OTCPK:SFTBY -0.2%) invested in Sprint mainly to tie it to T-Mobile -- "Sprint's in a world of hurt," says Moffett.
- All options might be on the table: Aside from going for T-Mobile, there's trying to elbow it aside to partner with Dish itself; joining up with a more merger-shy Comcast; or selling some of its spectrum haul for cash it may soon need.
- Previously: Sprint CEO: We'll have best or second-best network in two years (May. 27 2015)
- Previously: Sprint network: No need to buy spectrum in auction, CFO says (May. 19 2015)
- Previously: Sprint: Amid network investment, cash burn back in focus (May. 06 2015)
Dec. 31, 2014, 8:42 AM
- Streaming: Sony (NYSE:SNE), HBO (NYSE:TWX), CBS (NYSE:CBS), and Dish Networks (NASDAQ:DISH) are set to unveil streaming products in 2015. The theory of the companies that the skinny bundles will draw in more cord-cutters and cord-nevers than they will cannibalize current pay-TV subscribers will be put to the test. The rush of streaming options could help or hurt Netflix (NASDAQ:NFLX) depending upon which analysis an investor leans on.
- Theater traffic rebound: Exhibitors (CNK, RGC, AMC, CKEC, IMAX) and movie studios (LGF, VIA, VIAB, DIS, FOXA, CMCSA, TWX) maintain that the decline in theater attendance in 2014 (-6%) was due to a slate of films light on blockbusters. A bounce is forecast for 2015 with high-profile films such as Avengers: The Age of Ultron, The Hunger Games: Mockingjay Part 2, Fifty Shades of Grey, Jurassic World, Spectre (James Bond), and Mission Impossible 5 all set to premiere - along with the reboot of the Star Wars franchise in December. Capex spending on theater upgrades could also help boost in-theater spending and average ticket price for exhibitors.
- Mergers: If regulators allow the Comcast-Time Warner Cable (NYSE:TWC) and AT&T-DirecTV (NASDAQ:DTV) mergers to sail through it could clear a path for other media combinations, note analysts. Potential buyers include Alibaba (NYSE:BABA), Wanda Group, Softbank (OTCPK:SFTBY), and a TWX-rebuffed 21st Century Fox (NASDAQ:FOXA). Content producers which could be targets include Starz (NASDAQ:STRZA), Lions Gate (NYSE:LGF), DreamWorks Animation (NASDAQ:DWA), AMC Networks (NASDAQ:AMCX), and Scripps Networks (NYSE:SNI). A split-up Madison Square Garden (NASDAQ:MSG) could also be enticing.
Oct. 30, 2014, 1:49 PM
- The WSJ reports SoftBank (OTCPK:SFTBF) has tasked new Sprint CEO Marcelo Claure with "gathering information" on the Mexican telecom assets America Movil (AMX +0.4%) plans to sell to appease regulators.
- AMX was reported last month to have contacted SoftBank (among other carriers) to gauge its interest in buying the assets. BofA has estimated a sale could fetch $15B, but a WSJ source says bidders are eying a ~$10B price.
- AT&T has suggested it's looking to make an offer. Three weeks ago, Carlos Slim told Bloomberg the asset sale could extend beyond Mexico's eastern coast.
Oct. 14, 2014, 6:25 PM
- Fresh off taking a $250M stake in studio Legendary Entertainment, SoftBank (OTCPK:SFTBF) has bought DramaFever, a site that offers free (ad-supported) and subscription-based access to foreign movies and TV shows, much of it from South Korea. The price is undisclosed for now.
- Re/code previously reported InterActiveCorp (NASDAQ:IACI) was thinking about buying DramaFever, and said it heard of price tags ranging from $80M-$140M.
- The Legendary and DramaFever deals follow SoftBank's hiring of Google sales chief Nikesh Arora to be the conglomerate's vice chairman and Internet/media chief.
Sep. 30, 2014, 6:57 AM
- A new report has surfaced from The Hollywood Reporter stating that Japan's SoftBank (OTCPK:SFTBY) is in talks to acquire a minority stake in privately held movie studio Legendary Pictures. The publication says the talks have been going on for weeks.
- The news comes following reports that SoftBank's discussions to buy Dreamworks Animation have cooled.
Sep. 29, 2014, 5:47 PM
- The WSJ says it "wasn't immediately clear" what led buyout talks between SoftBank (OTCPK:SFTBF) and Dreamworks (NASDAQ:DWA) to cool. The paper now reports the companies "could ultimately strike a deal other than an outright takeover ... for instance some kind of content partnership."
- DWA -7.4% AH to $26.10. Shares rose 26% in regular trading on reports of acquisition talks featuring a $32/share offer.
Sep. 28, 2014, 5:06 AM
- SoftBank (OTCPK:SFTBY) is in talks to buy DreamWorks Animation (NASDAQ:DWA) in a deal that would value the company at $3.4B, states The Hollywood Reporter.
- Under the proposed deal, DWA founder and CEO Jeffrey Katzenberg would sign a five-year contract to remain with the company.
- SoftBank is said to have offered $32 per share for DreamWorks, a substantial premium to the stock's Friday closing price of $22.36.
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