SoftBank to turn Yahoo into a consolidated subsidiary

Telecom carrier SoftBank has announced that plans to rise its share in the capital equity of Yahoo Japan (currently a 12.08% excluding the number of treasury shares) to the 44.64%.

Yahoo Japan has announced a tender offer for new shares and SoftBank has decided to acquire all of the 1,511,478,050 new titles to be issued by Yahoo.

After the operation is concluded on 27th June 2019, SoftBank expects to turn Yahoo into a consolidated subsidiary.

SoftBank calculates that  the purchase of all the new common shares to be isued by Yahoo Japan will cost the company yen 456,466,371,100.

The agreement with yahoo Japan to carry out this acquisition was reached in late February 2019 and the tender offer will be carried out in June.

The largest user base in Japan and set to exprime the data advantage

Since the begining of its operations in Japan in 1996, Yahoo has made efforts to expand its business scope and growing business meeting customer needs and adapting to the market environment, which has changed in with the new communications environment, devices and technology. Yahoo has been working to develop services to make their platform more user convenient including “Yahoo! News” as well as “Yahoo! Shopping”,“Yahoo! Auctions” and “Yahoo! Wallet.” As a result, as shown in “Tops of 2018: Digital in Japan” published by Nielsen Digital Co., Ltd., Yahoo Japan now enjoys the largest user base in Japan.

In addition, Yahoo Japan has set its strategy to become “a data company” under its new management structure that took office in Fiscal year ended March 31, 2019. Achieving further growth by using the “findings” that cannot be deduced by a human to improve its services and business adds to the other business objectives.

The findings from data are obtained by its service lineup -the largest in Japan- and the massive amount of data coming from these services that are analyzed applying AI tech.

From effective control to the subsidiary estage

To de current 12.08% of Yahoo Japan owned by SoftBank, they add the 36.08% owned by SoftBank parent company SoftBank Group Corp. (SBG) through its wholly-owned subsidiary SoftBank Group Japan Corporation (SBGJ). As both SoftBank and SBGJ are consolidated subsidiaries of SBG, ikn fact the parent company currentñly owns a total 48.16% capital equity share in Yahoo.
After the purchase operation SBG would control almost a 90% (a 80.72%) of Yahoo.

The path to the consolidation

SoftBank explains that they and Yahoo Japan have been cooperating for years. In addition to a collaboration agreement regarding various telecommunications-related businesses beginning with “Yahoo! BB”, SoftBank has expanded their services for smartphone customers thanks to the collaboration mainly in e-commerce. Softbank has also improved the comprehensive value of telecommunications and its related services through the synergy effects of this cooperation, and succeed to differentiate from other carriers.

In June 2018, SoftBank and Yahoo Japan established a joint venture company, PayPay Corporation, and started to expand new businesses such as mobile payments named PayPay using bar codes and QR codes.

On 1st August 2018 both companies strengthened their relationship through a capital alliance, resulting in SoftBank purchase of a participation of the 12.08% in th capital equity of Yahoo Japan.

While the opportunities for cooperation between the two companies are extremely wide-ranging, both recognize however that it is essential that strategic decision mainly about technology development should be made with speed and in close contact, in the harshly competitive environment both companies operate, explains SoftBank.

A win win operation

The purchase operation to be executed next July aims to deepening the coordination with the Yahoo Japan group in FinTech and other non-telecommunications business fields so as to maximize synergy effects and to expand and enhance mutual customer bases, as well as to accelerate the provision of services suited to users, it comes the plan to purchase all new Yahoo shares in the tender offer to be launched, as Softbank explains.

Among the benefits to be achieved by both companies through yahoo’s transformation in a SoftBank’s subsidiary SoftBank lists: (i) a service lineup that will be expanded using our services built on our telecommunications business, together with Yahoo Japan’s media business and commerce business, (ii) the largest customer base in Japan which will be held by the two companies, and (iii) the massive volume and variety of multi-big data that is obtained from that customer base and through IoT.

After Yahoo! Japan becomes a subsidiary of SoftBank accounting will be done with Yahoo Japan’s results consolidated retrospectively to April 1, 2019, in accordance with the accounting policies of SoftBank Group. As a result of this consolidated accounting SoftBank’s  new forecast of consolidated financial results for the fiscal year ending March 31, 2020, are revenue of 4,800 billion yen, operating income of 890 billion yen, and net income attributable to owners of the Company of 480 billion yen. Furthermore, we plan to pay dividends per share of 85.00 yen, of which 42.50 yen will be an interim dividend.

Image over the headline.- Respectively © SoftBank and © Yahoo Japan

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