By Charles Heighton – The London Financial Markets Editor and VP of Trading at King’s Global Markets
Masayoshi Son’s conglomerate SoftBank has had a rocky year or two. I have been relatively critical of Son’s leadership and the current state of the company. However, you have to give credit when it is due and the sale of Boston Dynamics this week certainly deserves a round of applause.
Boston Dynamics is a US robotics company previously owned by Google that SoftBank acquired in 2017 for over $100 million. It has just been sold to Hyundai the South Korean auto manufacturer for a deal valued at over a billion dollars. That is a very impressive return in 3 years.
The deal is an interesting choice for Hyundai who are attempting to diversify beyond cars. The use of these robots for manufacturing offers the company options. This is part of an aggressive strategy by the new Chairman to increase the company’s investments in the future. Hyundai has previously been criticised for being backward-looking and slow to adapt. Mr. Chung, who became Chairman in October is clearly on a mission to eradicate this reputation.
Interestingly, SoftBank’s stock declined nearly 5% on Friday when the news broke. This cannot be explained by broader market sentiment as the NASDAQ fell only 0.23%. Perhaps investors think that this sale is premature and that there could be higher pay-out available in a few years. While this may be true, SoftBank needs any victory they can get. They are also retaining a 20% stake in the company so they are still exposed to any future upside.
This sale could be motivated by Son’s desire to slowly take the company private by using buybacks until he has a controlling percentage of the shares. This is probably a good idea. SoftBank is in ways a bit of a failed attempt at a publicly listed hedge fund and venture capital fund. Son has made some great investments, but he also takes great risks. For example, the massive bets on the NASDAQ earlier in the year that made shareholders nervous. With these factors in mind and the unusual amount of control that Son seems to have over a publicly listed entity, it is easy to see why it might be better for all involved if the company was private.
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