NEWBURY, England—Vodafone Group plc confirmed that it will sell its struggling Japanese operation to Japanese Internet conglomerate Softbank in a deal valued at about $15.4 billion.
The cash that Vodafone receives from the sale is to be dispensed to shareholders after the transaction closes, which is expected to happen in the second quarter. Softbank won out despite one rival bid; Vodafone did not release the name of the rival bidder, but the Wall Street Journal reported that two private equity companies were preparing a $15 billion bid. The move gives Softbank control over the third-largest mobile operator in Japan.
“It has become increasingly clear that the greatest operational benefits come from strong local and regional scale,” said Arun Sarin, Vodafone’s president and chief executive officer. “In the case of Japan, we have been making progress on the turnaround in recent months. However, given the relative competitive position of the business, the reduced prospects for superior long term returns and a good offer from Softbank, the board took the decision to sell.”
Vodafone will keep about $1.8 billion in preferred stock shares in the new Softbank subsidiary that will oversee the business. The European operator also will receive warrants that it can transfer into 10-percent ownership of the Softbank subsidiary after March 2013. The companies also are discussing a joint working relationship for the supply and distribution of data and content “to ensure that Vodafone continues to have access to the ongoing technological and service developments in the mobile industry in Japan.”
Investors didn’t seem impressed by the news. Vodafone’s stock on both the London and New York stock exchanges was trading down slightly by mid-morning.
The sale of Vodafone K.K. is expected to lessen some of the pressure on Vodafone’s leadership to prop up its stock price. Investors have pushed the carrier to sell its operations in Japan and/or its 45-percent stake in Verizon Wireless. Sarin said in a conference call that Vodafone was “happy” with its position in the United States and had no current plans to sell its stake. Verizon Communications Inc. has recently reiterated its interest in being the sole parent of Verizon Wireless, the better to compete with a new AT&T Inc. that will have full control of Cingular Wireless L.L.C. if AT&T’s acquisition of BellSouth Corp. gains government approval. Verizon reportedly has made an informal offer of $40 billion for Vodafone’s stake in Verizon Wireless.
