SoftBank Expects Windfall Gain of $34B From Alibaba Stake Sale: Report

  • SoftBank Group Corp SFTBY looks to post a 4.6 trillion yen ($34.1 billion) gain from settling forward contracts for Alibaba Group Holding Limited BABA stock, Bloomberg reports.
  • It is a far more considerable windfall than previously reported.
  • SoftBank's board approved the early physical settlement of prepaid forward contracts corresponding to 242 million American Depositary Receipts. 
  • Also Read: Alibaba Sees Cloud Growth In Otherwise Slow Q1, Clocks $3.3B Free Cash Flow, CFO Talks Listing Plans
  • SoftBank's stake in Alibaba would fall to 14.6% from 23.7% as of the end of June after the settlement.
  • Recently, SoftBank sold about a third of its stake in Alibaba through prepaid forward contracts this year, raising $22 billion in cash.
  • SoftBank has sold more than 50% of its stake in Alibaba through these contracts, which could reduce its holding in the e-commerce giant below the threshold required to hold a board seat.
  • The dwindling fortunes of the Chinese tech shares have prompted concerns over the stake selloff.
  • SoftBank analysts flagged concerns about SoftBank going private following record quarterly losses fueled by the tech sector meltdown.
  • Price Action: BABA shares traded lower by 1.83% at $89.52 in the premarket on the last check Wednesday.
  • Photo via Wikimedia Commons
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