Yahoo Japan Corp. surged in Tokyo trading after canceling plans to acquire eAccess Ltd. from SoftBank Corp. to focus on developing services as part of a strategy to expand into mobile.
The shares rose 12 percent, the biggest gain since January 2013, to close at 459 yen. The Tokyo-based Internet portal operator has slumped 22 percent this year, compared with an 11 percent drop in the broader Topix index. SoftBank added 0.4 percent.
Yahoo Japan and eAccess decided they didn’t need to combine businesses and that they could cooperate while developing their operations separately, according to a statement yesterday. Yahoo Japan will still pursue the “Y!mobile” service with SoftBank while eAccess builds infrastructure, according to the statement.
“The decision to terminate the eAccess deal was the right one,” Eiji Maeda, an analyst at SMBC Nikko Securities Inc. in Tokyo, said in a note dated yesterday. The acquisition of eAccess would have resulted in “opportunity costs,” diverting cash from Yahoo Japan’s core competencies, wrote Maeda, who upgraded the company to an outperform rating from neutral.
Analysts raised questions about the cost of the 324 billion yen ($3.2 billion) deal when it was first announced March 27 and whether the price was appropriate given that all three companies are controlled by Masayoshi Son. The original agreement called for Yahoo Japan to pay 80 percent more in cash for eAccess than the 180 billion yen SoftBank paid for the assets at the end of 2012.
The cancellation of the sale would have minimal impact, SoftBank said in a statement yesterday. The phone company said it won’t book a 55.7 billion yen gain on the sale that it had planned to record on a parent basis this fiscal year.
SoftBank, which paid about $22 billion for control of Sprint Corp. in the U.S. last year, is seeking to diversify as Japan’s population ages and its home market shrinks.