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

Scotland Vote Raises Questions of International Law

Experts say self-determination, as defined and protected by international law, confined narrowly to independence movements in process of de-colonization More

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

Conservationists hail ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015 More

Annual Military Exercise Takes on New Meaning for Ukraine Troops

Troops from 15 nations participating in annual event, 'Rapid Trident' in western Ukraine 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.
Russian Economy Reeling After New Western Sanctionsi
X
September 18, 2014 2:28 AM
A new wave of Western sanctions is hitting Russia’s economy hard. State-owned energy firms continue to bleed profits and Russia’s national currency plunged to a new low this week after the U.S. and the European Union announced new sanctions to punish Russia's aggressive stance in eastern Ukraine. But as Mil Arcega reports, the sanctions could also prove costly for European and American companies.
Video

Video Russian Economy Reeling After New Western Sanctions

A new wave of Western sanctions is hitting Russia’s economy hard. State-owned energy firms continue to bleed profits and Russia’s national currency plunged to a new low this week after the U.S. and the European Union announced new sanctions to punish Russia's aggressive stance in eastern Ukraine. But as Mil Arcega reports, the sanctions could also prove costly for European and American companies.
Video

Video Belgian Researchers Discover Way to Block Cancer Metastasis

Cancer remains one of the deadliest diseases, despite many new methods to combat it. Modern medicine has treatments to prevent the growth of primary tumor cells. But most cancer deaths are caused by metastasis, the stage when primary tumor cells change and move to other parts of the body. A team of Belgian scientists says it has found a way to prevent that process. Zlatica Hoke has more.
Video

Video Mogadishu's Flood of Foreign Workers Leaves Somalis Out of Work

Unemployment and conflict has forced many young Somalians out of the country in search of a better life. But a newfound stability in the once-lawless nation has created hope — and jobs — which, some say, are too often being filled by foreigners. Abdulaziz Billow reports from Mogadishu.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.
Video

Video NASA Picks Boeing, SpaceX to Carry Astronauts Into Space

The U.S. space agency, NASA, has chosen Boeing and SpaceX companies to build the next generation of spacecraft that will carry U.S. astronauts to the International Space Station by the year 2017. The deal with private industry enables NASA to end its dependence on Russia to send space crews into low Earth orbit and back. Zlatica Hoke has more.
Video

Video Future of Ukrainian Former President's Estate Uncertain

More than six months after Ukraine's former President Viktor Yanukovych fled revolution to Russia, authorities have yet to gain control of his palatial estate. Protesters occupy the grounds and opened it to tourists but they are also refusing to turn it over to the state. VOA's Daniel Schearf reports from Mezhigirya, just north of Kyiv.
Video

Video China Muslims Work to Change Perceptions After Knife Attacks

China says its has sentenced three men to death and one woman to life in prison for a deadly knife attack in March that left more than 30 dead and 140 injured. Beijing says Muslim militants from China's restive western region of Xinjiang carried out the attacks. Now, more than six months after the incident, residents in the city are still coping with the aftermath. VOA's Bill Ide has more from Kunming.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid