SoftBank Group Shares Hit Over Two-Month High on T-Mobile Stock Gains

By P.R. Venkat

SoftBank Group's shares rose to a more than two-month high on potential investment gains the conglomerate could record as it receives additional shares of T-Mobile US.

In early trade Wednesday, SoftBank stock jumped 7.0% to hit an intraday high of 6,528 yen ($45.84). Shares are currently up 5.14% at Y6,413.

The gains come after T-Mobile said overnight that it will issue 48.8 million shares to the Japanese company. The two parties had previously struck a pact that allows SoftBank to regain those shares if T-Mobile's volume-weighted average price, or VWAP, reaches a certain threshold before the end of December 2025.

The deal was agreed in 2020 when SoftBank gave up the chunk of T-Mobile shares to help the U.S. company seal its all-stock merger with Sprint. According to the agreement, SoftBank had the right to buy those shares for no additional consideration if the 45-day VWAP of T-Mobile common stock is equal to or greater than $150.

T-Mobile said Tuesday that its 45-trading day VWAP had exceeded $149.35 on Dec. 22 and so it will issue the shares to SoftBank. That price level became the latest threshold for SoftBank to exercise its rights to the shares due to T-Mobile having declared a dividend.

"We estimate that the market value of these rights has increased by around $1.3bn since the end of September 2023," Nomura analyst Daisaku Masuno said in a note while raising SoftBank's target price to Y9,280 from Y8,200 to factor in higher earnings.

In a separate statement, SoftBank said that based on T-Mobile's closing price Tuesday, the fair value of shares was $7.59 billion compared to $5.67 billion as of end-September.

Shares of T-Mobile have risen in value over the past twelve months. Year-to-date, the stock is up 12.0%.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

December 26, 2023 23:01 ET (04:01 GMT)

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