Alibaba Details Price for Buying Back Stock From SoftBankby and
Bulk of divestment going into a trust for institutional buyers
SoftBank is seeking to improve balance sheet, manage leverage
Alibaba Group Holding Inc. is paying $74 a share to buy back $2 billion of its own stock from SoftBank Group Corp., as the Japanese company embarks on an asset-divestment plan to shore up its finances.
In addition to Alibaba’s purchase, SoftBank will sell $400 million in Alibaba shares to the Alibaba Partnership and $500 million each to two state-owned investment firms in Singapore--all at the same per-share price, Alibaba and SoftBank said in separate statements Wednesday. In total, SoftBank is selling $8.9 billion of its stake in the Chinese e-commerce giant.
SoftBank approached Alibaba six months ago to express interest in divesting part of its stake in the company, which it has held for 16 years. Timing the transaction was tricky because SoftBank Chairman and Chief Executive Officer Masayoshi Son sits on Alibaba’s board, SoftBank’s President Nikesh Arora said during a conference call.
When completed, the sales will reduce the size of SoftBank’s stake in Alibaba to about 28 percent from just more than 32 percent. SoftBank had previously announced the Alibaba share sales without giving a price. Alibaba declined 6.5 percent to $76.69 at the close in New York on Wednesday.
The divestiture is part of the Japanese company’s broader plan that will probably include further asset sales as it seeks to strengthen its finances, according to a person familiar with the matter. The proceeds will not be used to purchased assets of Yahoo Inc., Arora said.
“We intend to use the capital proceeds to manage our leverage and our balance sheet, which does not include expanding and buying things in the U.S.,” Arora said on the call. “I can unequivocally say we are not involved in the process that Yahoo Inc. is running in any way shape or form.”
Yahoo is considering asset sales, including possibly disposing of its 35.5 percent stake Yahoo Japan Corp. SoftBank is the largest investor in the Japanese portal and controls several board seats.
SoftBank’s shares fell 1.6 percent in Tokyo on Thursday, while Yahoo Japan climbed 1.2 percent.