In the first quarter of 2006, Softbank Corp, a Japanese Internet company, disclosed that it entered into an agreement with Vodafone Group Plc for the purchase of its Japanese unit, Vodafone K.K. for ¥1.75 trillion. To materialize this, Softbank needs to raise around ¥1.2 trillion through leveraged-buyout ("LBO") financing. This would be the largest sum ever raised for a buyout by a single Japanese company.
Mitsuru Misawa
Harvard Business Review (HKU793-PDF-ENG)
January 05, 2009
Case questions answered:
- Estimate the all-in cost of debt financing alternatives in terms of yen.
- 1What are the reasons for a company such as Softbank to acquire another company?
- What were Son’s motivations for Softbank’s acquisition of Vodafone KK?
- What could be the pros and cons of this deal for Softbank?
- Prepare Vodafone KK’s pro forma future cash flow statement for 2006–2008.
- Estimate the future exchange rates between the US dollar, British pound, and yen.
Not the questions you were looking for? Submit your own questions & get answers.
Softbank's New Strategy: The Largest LBO in Japan Case Answers
This case solution includes an Excel file with calculations.
You will receive access to two case study solutions! The second is not yet visible in the preview.
1. Estimate the all-in cost of debt financing alternatives in terms of yen.
To compute the all-in cost of debt financing alternatives in terms of yen, we first forecast the exchange rates for the next five years using the Purchasing Power Parity Formula found in Appendix II. The forecasted exchange rates are given below:
Next, we compute the cash flows for the next five years using the details provided in Appendix II and then get the IRR using the IRR formula in Excel. The computation is provided below…
Unlock Case Solution Now!
Get instant access to this case solution with a simple, one-time payment ($24.90).
After purchase:
- You'll be redirected to the full case solution.
- You will receive an access link to the solution via email.
Best decision to get my homework done faster!
Michael
MBA student, Boston
Best decision to get my homework done faster!