Quitting Supercell would aid SoftBank's reboot. Chinese tech giants are reportedly circling the Japanese group's subsidiary responsible for Clash of Clans and other mobile-gaming smashes. A sale could generate a good return. It would also suggest that, under President Nikesh Arora, SoftBank is becoming more disciplined about selling as well as buying assets.
The Wall Street Journal says Tencent, China's biggest gaming company, is in early-stage talks about buying Supercell. Rival Giant Interactive, working with Alibaba - the e-commerce group and SoftBank affiliate - has shown interest too, the paper says. Analysts at Northern Trust suggest NetEase, another Chinese gaming specialist, is a third potential suitor.
Any of these would be a more natural owner than SoftBank. They could push Supercell games harder in China, and share costs and knowhow with existing games operations. Meanwhile SoftBank could quit a notoriously fickle, hit-driven industry on a high note.
There would be a good payoff, too. SoftBank invested $1.2 billion in late 2013, and then bought out one of its partners, GungHo, the following year for about $340 million. Last year it increased its stake from 51 per cent to 73 per cent, in a deal the WSJ says valued all of Supercell at about $5.25 billion. That implies a further outlay of nearly $1.2 billion.
Suppose a suitor now pays $6 billion. That would be roughly 6.4 times Supercell's 2015 EBITDA of $930 million, in line with what Activision paid for King Digital, the maker of Candy Crush, last year. A deal closing in, say, three months would generate a decent 25 per cent internal rate of return for SoftBank, Breakingviews calculations suggest. SoftBank could of course keep a residual stake, and share in some of the future upside.
A sale would also be handy given SoftBank's prodigious borrowings and could help to fund a planned 500 billion yen ($4.6 billion) stock buyback.
SoftBank has historically been quicker to accumulate assets than to sell. A full or partial exit here would show that Arora, the former Google executive who arrived last year as second-in-command to founder Masayoshi Son, is ready to reprogramme the internet conglomerate.
The Wall Street Journal says Tencent, China's biggest gaming company, is in early-stage talks about buying Supercell. Rival Giant Interactive, working with Alibaba - the e-commerce group and SoftBank affiliate - has shown interest too, the paper says. Analysts at Northern Trust suggest NetEase, another Chinese gaming specialist, is a third potential suitor.
Any of these would be a more natural owner than SoftBank. They could push Supercell games harder in China, and share costs and knowhow with existing games operations. Meanwhile SoftBank could quit a notoriously fickle, hit-driven industry on a high note.
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Suppose a suitor now pays $6 billion. That would be roughly 6.4 times Supercell's 2015 EBITDA of $930 million, in line with what Activision paid for King Digital, the maker of Candy Crush, last year. A deal closing in, say, three months would generate a decent 25 per cent internal rate of return for SoftBank, Breakingviews calculations suggest. SoftBank could of course keep a residual stake, and share in some of the future upside.
A sale would also be handy given SoftBank's prodigious borrowings and could help to fund a planned 500 billion yen ($4.6 billion) stock buyback.
SoftBank has historically been quicker to accumulate assets than to sell. A full or partial exit here would show that Arora, the former Google executive who arrived last year as second-in-command to founder Masayoshi Son, is ready to reprogramme the internet conglomerate.