SoftBank shares fall 9.5% on report it is weighing bid for Allied Universal

what happened

SoftBank shares slid 9.5% after Bloomberg reported that the Japanese company is considering buying Allied Universal, the largest security services provider in the US. Citing people familiar with the matter, the agency said a deal could value privately held Allied at up to $18 billion in equity.

According to those sources, deliberations are preliminary and no final decisions have been made, including on price. Allied is backed by Warburg Pincus and Canadian pension fund La Caisse and has about $12 billion of publicly traded debt, which could take the total transaction value to around $30 billion. SoftBank, Warburg Pincus and La Caisse declined to comment to Bloomberg, and Allied did not respond to requests for comment.

why it matters

For SoftBank investors, the size of the possible deal is the key point behind the share drop, since a transaction of this scale would weigh on the balance sheet. Talks are at an early stage, so the outcome remains uncertain.

market impact

SoftBank: share price reacts to a possible large acquisition, which raises balance-sheet and deal-execution risk

tags

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