SoftBank Group Corp. (OTCPK:SFTBY) experienced its most substantial surge since June, with a gain of approximately 7%, as it secured around $7.6 billion worth of T-Mobile US Inc. stock. This move is part of an agreement established when T-Mobile merged with rival Sprint Corp. in 2020, in which SoftBank owned a significant stake.
On Tuesday, SoftBank announced that it would receive 48,751,557 shares of T-Mobile US at no additional cost. This stock infusion is a result of conditions met during the landmark deal with SoftBank-owned Sprint. As per the terms of their agreement, SoftBank is entitled to T-Mobile shares if the trailing 45-day VWAP (Volume-Weighted Average Price) – a measure of a stock’s valuation – equals or exceeds $150 at any point from the second anniversary of the deal through the end of 2025.
The acquisition of T-Mobile stock is expected to fortify SoftBank’s balance sheet, potentially providing the company with a new capital pool to leverage. The merger between Sprint and T-Mobile, valued at approximately $37 billion, stands as one of the largest-ever deals in the telecommunications industry.
Throughout the current year, SoftBank has steadily raised capital and intensified its pace of investment, anticipating more favorable market conditions in 2024. Masayoshi Son, SoftBank’s CEO, is strategically focusing on investments in artificial intelligence (AI) and autonomous driving, aiming to enhance the company’s reputation following a series of high-profile setbacks in previous years. The move to secure T-Mobile stock aligns with SoftBank’s broader strategy to position itself advantageously in evolving technology markets.
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