Alibaba (NYSE:BABA) is 2.7% lower in U.S. trading, and SoftBank (OTCPK:SFTBY) up 1.7%, the morning after the Japanese company said it would sell at least $7.9B worth of the Chinese retail conglomerate -- a move that surprised Goldman Sachs.
The impact of such a sale on Alibaba is minimized somewhat by the way it's put together, says SunTrust's Bob Peck. Some $2B in sales are of shares back to Alibaba (and another $400M to members of the Alibaba Partnership), while a newly created trust is offering $5B in securities exchangeable into Alibaba ADS.
Goldman's Ikuo Matsuhashi says the news came as a surprise, as many hadn't expected SoftBank to “move so quickly in terms of selling a stake in Alibaba given many market observers still believe that the latter has upside."
Matsuhashi is maintaining a Buy rating on SoftBank and a target price of ¥7,800, 24.8% upside from its current Tokyo price of ¥6,252.
As for Sprint (S -0.1%), Matsuhashi says the move isn't indicative of a change in circumstances there, since SoftBank management has already (and recently) expressed confidence that the U.S. telecom's earnings would improve.
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