SoftBank and Swiss Re’s stake sale talks hit a speed bump

Photographer: Akio Kon/Bloomberg

Talks between billionaire Masayoshi Son’s SoftBank Group Corp. and Swiss Re AG about buying a stake in the world’s second-biggest reinsurer have come to a standstill, people familiar with the matter said.

The two sides disagree on the price and size of the stake and how much management control would be handed to Son, said two people, who like the others asked for anonymity disclosing confidential information. Issues within SoftBank, such as the pending merger of its Sprint Corp. business with T-Mobile US Inc., and the initial public offering of SoftBank’s mobile unit, have also shifted Son’s focus, the people said.

While the talks cooled in recent weeks, they could still be revived, the people said. Officials for Swiss Re and SoftBank declined to comment.

A deal would help Son, who is reshaping Japanese mobile-phone carrier SoftBank into a technology investor, follow other business titans such as Warren Buffett in seeking to profit from the cash flows provided by reinsurance. But Swiss Re executives have pushed back against expectations that the company’s assets could be used to buttress Son’s investment projects, saying talks were limited to a stake of 10 percent or less. Initially, people familiar with the matter said SoftBank was seeking to buy as much as a third.

“If you have a small stake, you cannot influence the capital position, the assets,” Swiss Re Chief Executive Officer Christian Mumenthaler said on a conference call last month. “I feel there is a lot of paranoia about it.”

Adding to challenges for the deal, Chief Financial Officer John Dacey told investors it was “highly unlikely” that the company would sell treasury shares as part of the deal. Swiss Re’s reluctance to issue new shares means SoftBank must buy its stake on the open market at a price which has risen more than 4 percent since the talks were first announced, another person said.

Shares of Swiss Re dropped 1.2 percent to close at 93.50 Swiss francs on Wednesday. The company is scheduled to report earnings on Friday.

Mumenthaler has said that the talks were initiated by SoftBank. UBS Group AG is advising SoftBank, while Credit Suisse Group AG is advising Swiss Re.

Son has a net worth of about $14 billion and is Japan’s third-richest person, according to the Bloomberg Billionaires Index.

Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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