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Softbank buys 'Net broker
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July 10, 1998: 5:30 p.m. ET
Softbank invests $400 million in exchange for 27.2 pct. of E*TRADE
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NEW YORK (CNNfn) - Softbank Corp. of Japan has invested $400 million into E*TRADE Group Inc. in exchange for about 27.2 percent of the Internet discount brokerage firm.
Softbank based in Tokyo will acquire 15.6 million newly issued shares for approximately $25.56 each, the Palo Alto, Calif.-based company announced Friday.
Shares of E*TRADE (EGRP) closed down 1-1/16 at 24-1/2 on the Nasdaq. Softbank's stock doesn't trade in the United States.
The development came about a month after the two companies announced their intentions to form a joint venture and two days after the Japanese software distributor invested $250 million in Internet search engine, Yahoo! Inc.
As well as the E*TRADE stake, Softbank's holdings now include 31 percent of Yahoo!, a 35-percent stake in GeoCities, and a 71-percent stake in Ziff-Davis Inc.
"We believe that online investing is going to be one of the highest growth business segments of the next decade," said Masayoshi Son, president and chief executive of Softbank who will be joining the E*TRADE board.
E*TRADE said it will use a significant portion of the new capital for acquisitions that "complement the company's growth objectives."
Some of the funds will also be used for sales and marketing and infrastructure development.
The agreement includes a standstill provision under which Softbank will not acquire additional E*TRADE shares for a period of five years and an agreement under which Softbank will hold its shares for a minimum of two years. The agreement is subject to customary requirements for regulatory approval.
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