SoftBank's Son challenges investors to 'feel the force' of his $32 billion ARM gamble

Tue Jul 19, 2016 4:35am EDT
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By Makiko Yamazaki

TOKYO (Reuters) - SoftBank Corp (9984.T: Quote) founder Masayoshi Son, who created a $68 billion tech investment behemoth from a $50,000 start-up, has divided investors and analysts with his latest "crazy idea", the $32 billion acquisition of chip designer ARM Holdings ARM.L.

Visionary, risky, or both, the deal announced on Monday caught them all on the hop.

But in the way it was struck and presented, they all recognized the signature style of the man whose chutzpah led to successes like early investments in Yahoo! YHOO.O and Chinese e-commerce company Alibaba (BABA.N: Quote), which briefly made him Japan's richest man.

Many investors had been hoping Son would use cash from recent asset sales to buy back shares or pay down its hefty debt, so SoftBank's Tokyo shares were hit by a glut of sell orders on Tuesday morning, trading down almost 11 percent.

"A fresh acquisition is not what the market wants from SoftBank," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management.

"It's Mr. Son's style to keep expanding, but isn't he stretching too much?"

Investors fret the purchase of ARM, Japan's largest ever outbound deal, may be too much for SoftBank, still in the throes of turning around U.S. carrier Sprint (S.N: Quote) and tackling a $112 billion debt pile.

Others take the longer view.   Continued...

CEO of the SoftBank Group Masayoshi Son speaks at a new conference in London, Britain July 18, 2016. REUTERS/Neil Hall