Softbank to Acquire eAccess in $2.3 Billion Stock Swap
10/01/2012| 02:15am US/Eastern
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TOKYO--Softbank Corp. (>> Softbank Corp) will acquire smaller domestic rival eAccess Ltd. (>> eAccess) through a stock swap deal valued at $2.3 billion, or 180 billion yen--the Tokyo-based company's latest move in Japan's intense war of the smartphones.
Softbank, one of Asia's biggest Internet conglomerates, said the swap ratio gives eAccess a value of Y52,000 yen per share. It also gives eAccess's issued shares a value of about Y180 billion.
The deal will help eAccess and Softbank's unit, Softbank Mobile, utilize each other's available bandwidth to better cope with the increasing volume of data traffic that has accompanied the proliferation of smartphones.
The deal will allow Softbank to use e-Access's spectrum for its high-speed network called long-term evolution, or LTE. Carriers around the world are adopting LTE technology for their next-generation wireless network. Softbank sells Apple's new iPhone 5, which supports LTE technology.
"You asked if the iPhone 5 had an role as a trigger for this business merger. The answer is yes," said Softbank chief executive Masayoshi Son in response to a reporter's question.
At the same time, two companies will be able to reduce the burden from the high costs of building telecom infrastructure.
The deal would elevate Softbank's position closer to that of No. 2 mobile carrier KDDI Corp. (>> KDDI), which in October last year ended Softbank's monopoly as provider of Apple Inc.'s (>> Apple Inc.) iPhone in Japan.
Of Japan's three main mobile carriers, NTT DoCoMo Inc. (>> NTT DOCOMO Inc) is the only one that doesn't offer the iPhone.
Softbank has the third-largest number of mobile phone subscribers in Japan, totaling 30.1 million as of Aug. 31. Meanwhile, eAccess is the fourth largest, with 4.2 million subscribers.
The combined 34.3 million subscribers of Softbank and eAccess would rival No. 2 carrier KDDI Corp.'s (>> KDDI) 35.9 million as of the end of August.
Ahead of the announcement and trading suspension, eAccess shares ended 26% higher at Y19,000, giving the issue a market capitalization of Y65.8 billion.
Still, analysts said the acquisition price isn't excessive.
The acquisition will provide Softbank not only with more subscribers, but more radio spectrum, which e-Access is currently using for its services.
Even though Softbank is paying for e-Access's debt, the deal is "very attractive," considering how much new spectrum Softbank will gain through the acquisition, said Tokai Tokyo Research Center analyst Yusuke Tsunoda.
"This is a bargain for Softbank," he said. "Strategically, this is definitely a positive step for Softbank."
Juro Osawa contributed to this article.
Write to Hiroyuki Kachi at Hiroyuki.Kachi@dowjones.com
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