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SoftBank is selling its crown jewel to weather a 'tough market'

The Japanese firm Wednesday cut its stake in the Chinese e-commerce giant from 23.7% to 14.6% by settling some derivatives contracts early. announced. It was just two days after SoftBank sold its stake in Uber (UBER).

Estimated gross gains from Alibaba's deal reach ¥4.6 trillion ($34.1 billion), including his ¥2.4 trillion ($17.8 billion) from stock revaluation, according to SoftBank filings .

``The current stock market environment is difficult and may be prolonged.''SoftBank (SFTBF) said: Settlement of the forward contract for Alibaba shares is the best option for the company at this time, he added.

"By settling these contracts early, SoftBank will be able to eliminate concerns about future cash outflows and further reduce the costs associated with these prepaid forward contracts. These further strengthen our defense against challenging market conditions."

Alibaba also reported SoftBank's deal on its exchanges filed late Wednesday. An Alibaba spokeswoman said Alibaba would not comment beyond what was stated in the filing.

SoftBank founder and CEO Masayoshi Soninvested his $20 million in Alibaba in 2000. When Alibaba went public in 2014it was valued at $60 billion.
SoftBank's move to cut its stake in Alibaba comes at a turbulent time for both companies. SoftBank on Monday announced a record $23 billion net loss in the June quarter from April. That's because the market crash has devastated tech stocks and hurt the valuation of the company's Vision Fund investment. The company pulled out of companies likeUber (UBER) and Opendoor to raise cash.
Meanwhile, Alibaba has lost about $600 billion in market value since peaking in October 2020. A year-long regulatory crackdown by Chinese authorities, combined with economic headwinds, has hitAlibaba's earnings growth and the company has cut jobs . } We were forced to look for ways to reduce costs.

SoftBank is also looking to cut costs and raise cash to weather a market downturn.On Monday, the Son said the Vision He said there is no "territory".

"SoftBank is clearly in defensive mode," analysts at Jefferies said in a note earlier this week.

The company's willingness to sell its assets suggests that "under pressure, SoftBank will do whatever it takes to protect its shareholders, or sell it." said it was "willing to monetize the asset at a reasonable price." price.

"For SoftBank, there are few assets as liquid and large as Alibaba," they added.