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Vodafone to sell stake to Softbank?
For between £8bn and £9bn, says analyst...

By Reuters

Published: Monday 06 March 2006

Vodafone Group is in talks to sell a controlling stake in its struggling Japanese unit to Softbank, giving the UK group's battered shares a lift on Friday and its embattled CEO Arun Sarin some respite.

The underperforming Japanese unit has weighed on the group's shares for some time. A warning about weaker margins at the unit was the prime factor behind a sharp drop in the group's shares in November.

Sources close to the matter said the deal would be valued significantly higher than the 1 trillion yen ($8.6bn) figure that other sources said the two companies had discussed more than a year ago. The unit's book value is about 2 trillion yen.

The third-ranked Vodafone KK business has been the symbol of much of the British-based group's woes and analysts said any decision to sell the operation would ease some of the pressure on Vodafone to exit the US.

Vodafone, the world's largest mobile operator by sales, said on Friday the talks with the internet communications conglomerate may or may not lead to a deal and a further announcement would be made in due course.

The sources said the two companies were in the final stages of talks and a deal could be reached this month.

Softbank declined to comment.

Shares of Vodafone leapt as much 10 per cent on the news. The shares, which have underperformed the pan-European telecoms index by some three per cent this year, closed 8.5 per cent higher at 121.5 pence ($2.15).

Williams De Broe analyst Darren Ward said: "I'm surprised... it's happening so early [in the Japanese turnaround]. It runs the risk that it won't get a decent value for it but it may well be that Softbank have come to Vodafone, in which case maybe they can talk sensibly on price."

Ward put a price tag of between £8bn and £9bn on the entire 97.7 per cent stake.