SoftBank Corp. revealed in a statement it will spend $250 million to acquire a minority stake in closely-held Legendary Entertainment, providing the Japan-based company with online rights to the merchandise, TV and film business of the studio.
Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co Ltd commented on the companies settlement for Bloomberg: “The acquisition is positive for SoftBank in that it can strengthen its revenue base and its long-term goal is to become a number one Internet company. It could be possible that SoftBank will acquire more content companies related with Internet. They may acquire companies that can create synergies.”
According to people familiar with the process, who asked not to be identified because the terms of the deal are still not public, SoftBank will acquire a stake of 7.5% to 10% in Legendary, valuing the independent studio at more than $3 billion. The deal also gives the Japanese company the right to invest an additional $750 million by 2018 in two equal installments, raising the total value of investments to $1 billion.
A joint venture will be formed by the two companies, whose focus will be in developing online and mobile services primarily for China and India. The deal would provide the studio with fresh capital, while giving SoftBank access to Hollywood movies and TV shows for the networks it controls and helping it expand its reach in the US media industry.
Legendary Entertainment was founded in 2000 by former investment banker Thomas Tull and has become famous for producing movies such as “Godzilla” and “Pacific Rim”, as well as investing in movies like “300” and “The Dark Knight”.
The Vice Chairman of SoftBank and head of SoftBank Internet & Media – Nikesh Arora will join Legendary Entertainments board of directors. The Japanese company, which currently has a market capitalization of about $83 billion, has made investments in more than 1 300 tech companies and its 32% stake in Alibaba Group Holding Ltd received a value of about $70 billion following the e-commerces record IPO which was held in September.
SoftBank shared that the deal with Legendary is expected to be finalized in October this year.
SoftBank Corp. closed 0.73% lower on Friday at ¥7 439 per share, marking a one-year change of -1.21%. The company is valued at ¥8.93 trillion. According to the Financial Times, the 12 analysts offering 12-month price targets for Softbank Corp have a median target of ¥9 800, with a high estimate of ¥11 400 and a low estimate of ¥7 800. The median estimate represents a 31.74% increase from the last price of ¥7 439.
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