News / Asia

Largest Acquisition by a Japanese Company Announced

Softbank Corp President Masayoshi Son (L) shakes hands with Dan Hesse, president and CEO of the Sprint Nextel Corporation, in Tokyo, October 15, 2012.
Softbank Corp President Masayoshi Son (L) shakes hands with Dan Hesse, president and CEO of the Sprint Nextel Corporation, in Tokyo, October 15, 2012.
Mobile phone service provider Softbank has announced what would be the largest-ever foreign acquisition by a Japanese company. It intends to purchase Sprint, the number three telecommunications company in the United States, in a $20 billion deal.  

Softbank's acquisition of Sprint will create one of the world's largest telecommunications operators.

Both are number three in their respective markets and the combination will create a trans-Pacific company with more than 90 million customers.

The deal, approved by the boards of both companies, was officially unveiled at a hastily-arranged news conference in the Japanese capital.

Softbank is to purchase 70 percent of Sprint Nextel Corporation in a deal financed by three Japanese financial groups and Deutsche Bank.

Softbank founder Masayoshi Son acknowledged it is a risky deal, saying it would only be safe if he did nothing.

Son said the challenge in the United States will not be easy. But his company must enter a new market, one with a different culture and start again from zero after all that it has built.

Son said he will assume the chairmanship of Sprint, which will be a Softbank subsidiary, but said he wants Sprint's chief executive officer Dan Hesse to stay in his job.

Hesse took over Sprint five years ago. “My goal has always been the same," he said. "And it is to create the best wireless carrier in America. I believe without question that we are going to get there and the catalyst to get there is our partnership with Softbank.”

The two companies have a combined debt of $25 billion. The ratings-firm Moody's immediately announced it was looking at downgrading Softbank's credit rating.

Shareholder concern about the deal sent Softbank shares tumbling more than five percent in Tokyo trading. Softbank has lost a fifth of its value, or nearly $9 billion, since news of the deal first leaked last week. But Sprint's stock price has gone up.  

Softbank said the deal, following shareholder approval and regulatory review, is expected to be completed by the middle of next year.

Analysts said it makes sense for Softbank to go abroad because of market stagnation in Japan, which has a declining and aging population. The U.S. telecommunications market, on the other hand, is expanding.

Sprint, which has been losing money for years, is in a fierce battle for U.S. market share behind AT&T and Verizon.

The 55-year-old Son, known as a maverick in the Japanese business world, is an ethnic Korean who grew up poor in western Japan before moving to the United States at the age of 16 to finish high school. He is now one of the richest people in Japan.

Over the past couple of decades he has led a series of high-profile acquisitions and investments, including with Yahoo Japan, Vodafone Japan and the Chinese e-commerce company Alibaba.

But previous attempts by Japanese telecoms players to venture abroad have not gone well.  Industry giant NTT Docomo incurred huge losses with investments in AT&T Wireless and KG Telecom of Taiwan.

Steve Herman

A veteran journalist, Steven L Herman is the Voice of America Asia correspondent.

You May Like

Video Miami Cubans Divided on New US Policy

While older, more conservative Cuban Americans have promoted anti-Castro political movement for years, younger generations say economically, it is time for change More

2014 Sees Dramatic Uptick in Boko Haram Abductions

Militants suspected in latest mass kidnapping of over 100 people in Gumsuri, Nigeria on Sunday More

Video Cuba Deal Is Major Victory for Pope

Role of Francis hailed throughout US, Latin America - though some Cuban-American Catholics have mixed feelings More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid