SoftBank to spin out its global and domestic businesses

SoftBank has announced intentions to split its organisation into two, with one part focused on its Japanese operation and the other on its international business.
Written by Asha Barbaschow, Contributor

Japanese telecommunications giant SoftBank has announced its intentions to split its organisation into two separate, wholly-owned subsidiaries.

With tentative trade names of Domestic Operations Management Company and Global Operations Management Company, SoftBank said in a statement it wants to position both core businesses as future growth drivers.

Both businesses will operate out of the same location in Japan, with SoftBank representative director, president, and chief operating officer Nikesh Arora expected to head the global business, and director Ken Miyauchi to take on the local operation.

Currently, SoftBank expects its investment securities to be transferred to both companies in phases. The domestic branch is likely to take on the SoftBank Corp and Yahoo Japan Corporation shares, whilst the global arm is expected to be responsible for SoftBank's Starburst I, Inc, the holding company that holds the shares of Sprint Corporation, as well as shares invested in Chinese ecommerce giant Alibaba Group.

SoftBank said the proposed transfer will be conducted after it gains the approval of its shareholders, receives consent from all related parties including regulatory agencies, and meets compliance with relevant laws and regulations such as appropriately dealing with any contractual matters.

The timing and method of the transfer will be left to the discretion of Masayoshi Son, SoftBank chairman and CEO, the company said.

The transfer is currently slated for December 31, 2016, with the transfer of subsidiary shares to began as soon as this month.

Last month, SoftBank revealed its plans to launch a stock buyback program worth up to $4.4 billion, with the company saying it was to increase its share price.

At the time, SoftBank said the latest share repurchase would take place over the course of a year and will be funded through cash reserves and the sale of items in the company portfolio. Over the past year, SoftBank has received approximately 300 billion yen in the sale of investment securities and other assets.

In August 2015, SoftBank launched a separate 120 billion yen buyback program, leading to a temporary increase in the share price of the Japanese company.

SoftBank's pending split follows the likes of Sony, who announced its intentions to reshuffle its devices division operating structure in December, establishing a new business, Sony Semiconductor Solutions Corporation, and internally reallocating its battery and storage media business responsibilities.

"The aim of these measures is to ensure clearly attributable accountability and responsibility from the perspective of shareholders, management policies with an emphasis on sustainable profit generation, and the acceleration of decision-making processes and reinforcement of business competitiveness," Sony said of the split.

"The decision to establish Sony Semiconductor Solutions forms part of this strategy."

The Japanese conglomerate said the completion of its business reshuffle is expected by the end of next month.

Computer giant Hewlett-Packard also recently split into two, with one company focused on PCs and printers called HP Inc, and the other, Hewlett Packard Enterprise, concerned with commercial technology.

On Tuesday, Japanese media reported that SoftBank's rival telecom Nippon Telegraph & Telephone (NTT) is expected to offer computer giant Dell more than $3.52 billion to buy its IT services business.

The acquisition will come by way of NTT's subsidiary, NTT Data, with its president Toshio Iwamoto expected to make a formal offer to Dell in the US later this week.

It was reported that the move is aimed at bolstering the Japanese company's presence abroad and that Dell is seeking to sell this side of its business off to raise cash for the $67 billion acquisition of EMC.

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