From Breakingviews - SoftBank exit eases Alibaba's mega reboot
The Japanese group, reeling from rising global interest rates and a worldwide tech selloff, told the FT it is in "defensive mode.” That means selling assets including its Alibaba stake, which the Japanese conglomerate bought more than two decades ago for $20 million. Last year, it booked a 3.7 trillion yen gain from whittling that position down to just under 15%, from 23.7%; it has already sold a further $7.
Strategically not much changes for Alibaba. Its relationship with its erstwhile largest shareholder was largely driven by Son and founder Jack Ma's personal ties. Both men had stepped down from each other's boards back in 2020, shortly after Ma's retirement from Alibaba. Apart from a few joint investments, the two companies have operated independently. If anything, the stock overhang created by SoftBank’s plans to monetise its stake was a distraction.
With that out of the way, Zhang is cleared to focus on Alibaba's massive corporate overhaul unveiled last month. The company isinto six units. Some will probably be listed, others sold outright. Current shareholders will be left with a holding company led by Zhang, plus Alibaba's cash-cow Chinese commerce business.
Not all are convinced the reboot will unlock value. After soaring 20% in the three days following the breakup announcement, the rally has cooled; Alibaba's New York stock fell 10% since then before the SoftBank news. Boosting shareholder returns might win over skeptics. After all, Alibaba's U.S. shares are down over 60% in the past two years, while the S&P 500 has stayed largely flat.
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