Altaba's Yahoo block sale shows Japan's deep market

The New York-listed holding company stunned the market by selling its 23.9% stake in Yahoo Japan via an overnight block trade. It probably couldn't have happened elsewhere in Asia.

Altaba, the holding company created by Verizon's acquisition of Yahoo! Inc's Internet business, sold $4.3 billion worth of shares in Yahoo Japan on Monday in what is the second-largest follow-on offering in Asia so far this year.

The decision did not come as a surprise to the market as the New York-listed investment firm had made it clear that it wanted to sell its entire stake in the Japanese internet giant as early as February.

Still, the magnitude of the deal and the fact that it was structured as an accelerated bookbuild came largely unexpected to some investors.

In terms of total deal size, Altaba’s clean-up sale in Yahoo Japan was second only to South African Naspers’ gigantic $9.8 billion selldown in Hong Kong-listed Tencent in March. However, by selling 23.9% of Yahoo Japan overnight, the block deal has perhaps created one of the biggest free floats in Asia.

According to one investor who spoke on condition of anonymity, sellers typically do not sell more than 5% of an Asian company in a block deal because of the potential big changes in a company’s ownership structure.

In smaller markets where there are not a lot of sophisticated investors, a large free-float block deal may end up with shares going to a handful of investors. This can give rise to corporate governance issues such as board seats and voting rights, according to the fund manager.


Japan is perhaps the only market in Asia that can digest a high free-float block trade because of its deep and sophisticated investor base. On the back of a highly sophisticated institutional investor base, Japan also has a large group of 'mom-and-pop' retail investors that are keen to buy into commonly known private companies and large government privatisations. 

Last year, the Japanese government sold roughly a 25% stake in Japan Post Holdings through a $11.7 billion block trade, less than two years after the government privatised the national postal service through a three-way initial public offering.

In 2013, the government sold a third of its stake in Japan Tobacco, the world’s third-largest tobacco maker, for about $10 billion in an overnight block deal to help fund the rebuilding of Tohoku region in the northeast of the country, which was devastated by the March 2011 earthquake and tsunami. 

Altaba had originally planned to sell slightly over half of its stake – or 750 million shares out of its 1.36 billion shareholding – for $2.5 billion. The shares were marketed at an indicative price range of ¥353 to ¥360 each.

Faced with overwhelming demand, the New York-listed investment firm decided to upsize the deal in full about seven hours into bookbuilding late on Monday, a source familiar with the matter told FinanceAsia.

The investment firm fixed the final price at ¥354, representing a discount of 4.6% to Yahoo Japan’s ¥371 Monday close.

Following the sale, Altaba no longer owns any shares in Yahoo Japan. Worth noting though is that Altaba’s main asset after the Yahoo Japan sale is a 15% interest in Chinese internet giant Alibaba. The stake is worth $60.8 billion based on Alilbaba’s current share price, compared with Altaba’s market value of only $38.6 billion.

JP Morgan and Goldman Sachs were joint bookrunners on the Yahoo Japan share sale.

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media