Altaba Inc. formerly known as Yahoo! Inc is selling around $2 billion worth of its stake in Yahoo Japan to SoftBank as part of a three-way deal that will increase SoftBank's stake in Yahoo Japan.
The deal will see SoftBank raise its Yahoo Japan stake to about 48% from around 43% while Altaba will sell down its Yahoo Japan stake to about 27% after disposing of around 613,888,888 million shares worth $2 billion, according to Reuters.
From the reports, the deal is structured to see SoftBank buy 221 billion yen (~$2 billion) worth of Yahoo Japan shares from Yahoo Japan's second-largest shareholder, Altaba, through a tender offer at 360 yen (~$3.25) per share which is equivalent to Yahoo Japan share closing on Monday. And Yahoo Japan will buy back 220 billion yen ($2 billion) worth of shares from Softbank.
Altaba which has been selling down its shares will have two of its Yahoo Japan board representatives step down once the transaction announced on Tuesday is completed.
SoftBank will enjoy more market strength
The deal is like a breakthrough for SoftBank which has been working hard to boost its collaboration with Yahoo Japan. It will help the telecom giant to strengthen its Smartphone services, e-commerce, and other businesses through the search engine giants.
"I have strong confidence in the future performance of Yahoo Japan, and I'm excited about the significant synergies," said CEO Masayoshi Son, SoftBank Group.
Information about the transaction is coming as SoftBank prepare to list its local telecoms unit in what could be the largest Japanese IPO at least for two decades.
SoftBank has ride-booking services, financial-technology, solar energy, human-shaped companion robot and otter businesses. The leading Japanese telecoms giant also owns ARM, a British semiconductor company, SoftBank Hawks and a Japanese baseball team.
Yahoo Japan is one of the top search engines in Japan. The firm offers film listings, the news and online auctioning.
Yahoo! Inc. changed its name to Altaba after disposing most of its digital services including email to Verizon Communications in a deal worth $4.48 billion last year. The company was ordered to pay fine of $35 million to settle charges from federal regulators for deceiving its investors by not disclosing what has remained one of the biggest data breaches in the history of the internet. Hundreds of millions of U.S. Yahoo users had their personal data stolen by Russian hackers in a December 2014 breach.
Yahoo Japan shares increased by almost 12% after the deal was announced, meanwhile, Altaba shares which closed 0.3% higher Monday added another 0.5% on Tuesday.