SoftBank Group Shares Hit Over Two-Month High on T-Mobile Stock Gains
December 26 2023 - 10:16PM
Dow Jones News
By P.R. Venkat
SoftBank Group's shares rose to a more than two-month high on
potential investment gains the conglomerate could record as it
receives additional shares of T-Mobile US.
In early trade Wednesday, SoftBank stock jumped 7.0% to hit an
intraday high of 6,528 yen ($45.84). Shares are currently up 5.14%
at Y6,413.
The gains come after T-Mobile said overnight that it will issue
48.8 million shares to the Japanese company. The two parties had
previously struck a pact that allows SoftBank to regain those
shares if T-Mobile's volume-weighted average price, or VWAP,
reaches a certain threshold before the end of December 2025.
The deal was agreed in 2020 when SoftBank gave up the chunk of
T-Mobile shares to help the U.S. company seal its all-stock merger
with Sprint. According to the agreement, SoftBank had the right to
buy those shares for no additional consideration if the 45-day VWAP
of T-Mobile common stock is equal to or greater than $150.
T-Mobile said Tuesday that its 45-trading day VWAP had exceeded
$149.35 on Dec. 22 and so it will issue the shares to SoftBank.
That price level became the latest threshold for SoftBank to
exercise its rights to the shares due to T-Mobile having declared a
dividend.
"We estimate that the market value of these rights has increased
by around $1.3bn since the end of September 2023," Nomura analyst
Daisaku Masuno said in a note while raising SoftBank's target price
to Y9,280 from Y8,200 to factor in higher earnings.
In a separate statement, SoftBank said that based on T-Mobile's
closing price Tuesday, the fair value of shares was $7.59 billion
compared to $5.67 billion as of end-September.
Shares of T-Mobile have risen in value over the past twelve
months. Year-to-date, the stock is up 12.0%.
Write to P.R. Venkat at venkat.pr@wsj.com
(END) Dow Jones Newswires
December 26, 2023 23:01 ET (04:01 GMT)
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