Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) announced the cancellation of its agreement to sell shares of eAccess Ltd (TYO:9427) to Yahoo Japan Corporation (TYO:4689). The deal would have given the internet and telecommunications company an extra ¥450 billion or $4.4 billion funding for competition in acquisitions.
eAccess Ltd (TYO:9427) and Yahoo Japan Corporation (TYO:4689) are both subsidiaries of Softbank Corp (OTCMKTS:SFTBF) (TYO:9984). According to the parent company, the merger of eAccess to its subsidiary Willcom will continue as scheduled on June 1, and the new company will be called Ymobile Corporation.
Last March, Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) entered an agreement with Yahoo Japan Corporation (TYO:4689) to sell a 99.68% stake or 33.29% of the voting shares of eAccess Ltd (TYO:9427) after its merger with Willcom for ¥324 billion plus additional ¥130 billion to pay the debt of eAccess.
Mutual understanding
Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) explained after its agreement with Yahoo Japan Corporation (TYO:4689) on March 27, both companies conducted “further in-depth discussion on the mutual use of networks, service designs” among others and eventually came up with a mutual understanding that instead of converting the Ymobile Corporation (new company) into a consolidated subsidiary and build its own infrastructure, it is better for Yahoo Japan to build the business by utilizing the strengths of each company.
According to Softbank Corp (OTCMKTS:SFTBF) (TYO:9984), Yahoo Japan Corporation (TYO:4689) will be responsible for services while the new company for infrastructure and takeover the concept of “Delivering the Joy and Convenience of the Internet to Every Hand.” The concept was set by Yahoo Japan as part of the original agreement with its parent company.
In addition, Yahoo Japan Corporation (TYO:4689) and the new company will offer a new service under the new brand name Y!mobile. Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) said Yahoo Japan will announce more detailsabout the new service in the future.
Minor impact on financial results
According to Softbank Corp (OTCMKTS:SFTBF) (TYO:9984), the impact of the cancellation of the deal to its financial results for the fiscal year ending March 2015 will be minor.
On the other hand, Yahoo Japan revised its revenue forecast from ¥335.9 billion to ¥211.9 billion. Its estimated operating income is the same at ¥93.4 billion.
