SoftBank Buys Vodafone Japan For $15.5B

March 17, 2006

Vodafone Group today announced an agreement to sell its 97.68% interest in Vodafone Japan to SoftBank. The  sale values Vodafone Japan at an Enterprise Value of approximately $15.5 billion (¥1.8 trillion)  (£8.9 billion) of which $11.9 billion (£6.8 billion) will be received in cash on closing. Subsequently, Vodafone will distribute $10.5 Billion (£6 billion) of cash to shareholders.

SoftBank closed the deal despite reports Thursday that equity firms Cerberus and Providence were preparing a $15-billion bid to rival SoftBank’s.

One Vodafone adoption driver was their  third place standing behind other local carriers such as NTT DoCoMo and KDDI in the $78-billion Japanese mobile market..

Arun Sarin, Chief Executive of Vodafone, commented:

"I am pleased to announce this transaction which represents a good outcome for Vodafone. It is at an attractive price, will result in a £6 billion distribution of capital to shareholders and is enhancing to adjusted earnings per share. The Board has arrived at the decision to withdraw our capital from the Japanese market based on several key criteria. It has become increasingly clear that the greatest operational benefits come from strong local and regional scale. We seek to deploy capital only where we can generate superior returns for our shareholders in markets that offer a strong local position. In the case of Japan, we have been making progress on the turnaround in recent months. However given the relative competitive position of the business, the reduced prospects for superior long term returns and a good offer from SoftBank, the Board took the decision to sell. I would like to pay tribute to the management and employees of Vodafone Japan. They have made considerable progress in turning the business around. I am pleased that with the on-going relationship with SoftBank, one of the leading telecommunications and media companies in Japan, we will continue to benefit from insights in the Japanese market”.

SoftBank will take out a ¥100 billion ($861.4 million) loan that will be payable to Vodafone. SoftBank is also setting up preferred shares in wholly owned SoftBank subsidiary called Bidco worth ¥300 billion ($2.6 billion). They have a bridge loan in place for  ¥1.1 trillion to ¥1.2 trillion ($9.4 billion to $10.3 billion) to finance the acquisition. SoftBank is assuming about $1.4 billion (£800 million) in debt and other liabilities from Vodafone Japan.