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Japan's Softbank selling most of Yahoo stake

August 27, 2011|Reuters
  • Shoppers in Tokyo look over products by Softbank, Japan's third-largest wireless carrier.
Shoppers in Tokyo look over products by Softbank, Japan's third-largest… (Shizuo Kambayashi, Associated…)

Japanese telecommunications company Softbank said Friday that it would sell almost all its 4% stake in Yahoo Inc. to repay a loan of about $1.1 billion to Citibank.

Softbank said it would transfer the shares to Citibank to pay off the loan, which it took out in 2004.

However, Yahoo shares have fallen about 45% since then, meaning the market value of the stake is now closer to $660 million.

Softbank said the transaction was provided for under the agreement by which it obtained the loan, allowing it to repay either in cash or Yahoo shares.

Softbank

will retain a negligible 0.002% stake in Yahoo.

The deal marks a small step in unwinding a complex web of cross-shareholdings between Softbank, Yahoo, their jointly owned Yahoo Japan unit and Chinese Internet giant Alibaba Group.

Relations between Yahoo, Softbank and Alibaba have soured in recent years with Alibaba founder Jack Ma agitating to buy back Yahoo's roughly 40% stake in his company. Softbank founder and major Yahoo shareholder Masayoshi Son has openly attacked Yahoo's track record as an innovator and its approach to international markets.

Softbank, Japan's third-largest wireless carrier, controls 42% of Yahoo Japan. Yahoo Inc. has a 35% stake in the unit.

Earlier this year, sources said Yahoo was in talks to quit its Japanese joint venture and transfer its stake to Softbank.

But officials at both Softbank and Yahoo Japan said the ownership structure of Yahoo Japan would remain unchanged.

Yahoo's relationships with Softbank, Yahoo Japan and Alibaba are at the top of investors' minds because the U.S. company's Asian investments are deemed its most valuable assets. Some analysts estimate they make up almost all of Yahoo Inc.'s $16.6-billion market value.

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