SoftBank, a tech giant based out of Japan, recently acquired Fortress Investment Group for an estimated $3.3 billion. On December 27, 2017, the deal was officially completed after it had been in process for quite a long time before that. While SoftBank may own the company, Fortress Investment Group will still remain an independent business and keep its New York headquarters.
The reasoning behind SoftBank acquiring the Fortress Investment Group is their desire to move into private equity firm and away from debt financing. With Fortress’ extensive knowledge and experience in the area, they will be a valuable tool to help them complete the process. Prior to the purchase of Fortress Investment Group SoftBank had primarily been in the business of purchasing various tech startups.
Both companies involved have interesting backstories and long histories of success. While SoftBank originally sold PC software wholesale their business changed when they became they became a major investor in Yahoo!. They continued to evolve and hold shares in hundreds of internet-based companies. With their acquisition of Fortress, it is clear that they are changing their business strategy and moving in a new direction again. Fortress Investment Group has more than 2 decades of financial industry experience after being founded in 1998 by Wes Edens and Randy Nardone. They currently operate on behalf of at least 1,750 clients by managing around $40 billion in assets.
There are many different reasons why SoftBank is allowing Fortress to operate so independently despite the large acquisition price tag, many of these have to do with the laws involving international deals. In order for the Committee on Foreign Investments to allow the deal to go through SoftBank had to promise not to have much interference with how Fortress managed their assets in the United States. SoftBank agreed to these terms and also paid a premium to their shareholders of $8.08 per share. The acquisition of Fortress was not the only transaction that SoftBank has made recently. They also transferred their shares of UK’s Arm Holdings to their investment fund. In addition their acquisition of Boston Dynamics had to be completed before the Fortress transaction was allowed.