Tags: Softbank | EAccess | buy | Billion

Softbank to Acquire Japanese Rival EAccess for $2.3 Billion

Monday, 01 Oct 2012 07:38 AM

Softbank Corp., Japan’s third-largest mobile phone company, said it will buy rival eAccess Ltd. for 52,000 yen a share, valuing the smaller company at about 180 billion yen ($2.3 billion).

The stock transaction, which values eAccess at almost three times today’s closing price, will help Softbank compete against NTT DoCoMo Inc. and KDDI Corp., Softbank President Masayoshi Son said in Tokyo today. The company was “not overpaying” for eAccess, owner of the eMobile brand, he said.

Billionaire Son’s wireless carrier may use eAccess’s bandwidth to expand as people use smartphones to download videos and surf the Internet. Softbank has added subscribers as the country’s first carrier to offer Apple Inc.’s iPhone and iPad, helping its shares surge 37 percent this year in Tokyo trading, outperforming its bigger rivals.

“The cost may be expensive, but it erases a risk that Softbank will face a shortage of spectrum,” said Shinji Moriyuki, an analyst at SMBC Nikko Securities in Tokyo. “Softbank’s weakness has been a lack of bandwidth.”

IPhone 5 Influence

The deal was reported earlier today by the Nikkei newspaper. EAccess surged 26 percent to 19,000 yen in Tokyo trading, the most since its 2003 listing, after the Nikkei report and before trading was halted by the Tokyo exchange. The company’s biggest shareholder is Goldman Sachs Group Inc. with about 31 percent, according to Sayaka Iida, a spokeswoman for eAccess.

Softbank will pay 16.74 of its shares for each share of eAccess, valuing the Tokyo-based company’s stock at 52,000 yen, Son said. Including eAccess’s 223 billion yen of net debt, the deal is valued at 403 billion yen, according to data compiled by Bloomberg.

“With this agreement, we’ll be able to offer the best broadband services,” Son said. “We don’t think we’re overpaying.”

The release of the iPhone 5, which works with the faster long-term evolution, or LTE, standard, was one motivation for pursuing the deal, Son said.

‘Reaching Limit’

The purchase would be the largest takeover of a telecommunications or Internet company in Japan since eAccess acquired mobile-phone carrier eMobile Ltd. for 289 billion yen in stock in 2010, according to data compiled by Bloomberg. EAccess has lost 72 percent of its value since that deal was announced in March 2010.

“EAccess’s business model may be reaching its limit, while Softbank’s task has been to strengthen its service,” Ichiro Takamatsu, a fund manager at Tokyo-based Bayview Asset Management, said by phone. “Softbank may have been able to buy a bit cheaper.”

The carriers are competing in a market where the number of subscribers exceeds Japan’s population of 127 million.

Softbank added more users in August than DoCoMo or KDDI and had 30.1 million subscribers at the end of the month, trailing DoCoMo’s 60.6 million and KDDI’s 35.9 million, according to data compiled by Bloomberg. EAccess had 4.1 million subscribers as of June 30, according to its announcement in August.

EAccess had a market value of 52.2 billion yen at the close of trading in Tokyo on Sept. 28. Softbank fell 1.7 percent to 3,105 yen at the end of trading today, reversing an earlier gain of 0.6 percent.

EAccess will be converted into a wholly owned unit and will be delisted Feb. 25.


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Softbank Corp., Japan’s third-largest mobile phone company, said it will buy rival eAccess Ltd. for 52,000 yen a share, valuing the smaller company at about 180 billion yen ($2.3 billion).
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Monday, 01 Oct 2012 07:38 AM
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