The offer, which will run from Friday until mid-June, is priced at 4,000 yen per share. NTT is looking to pick up almost 593 million shares, which translates to total bill of JPY2.37 trillion, or $16.4 billion at current exchange rates.
As it stands, NTT holds 57.73% of NTT Data, according to its offer documents. If it is not able to pick up all the remaining shares through the offer it will go ahead with "procedures" to make NTT Data a wholly-owned subsidiary nonetheless, it explained.
That offer price represents a premium of more than 40% on NTT Data's closing price in Tokyo at the end of April – the firm accepted the tender offer on 1 May – NTT said, which surely gives it a good chance of securing those outstanding shares.
This is a pretty big money deal for NTT, assuming all goes to plan. But clearly it believes the benefits of bringing its global business and technology unit in house will be worth the outlay.
Indeed, the current ownership structure brings certain challenges, NTT explained in a presentation in which it outlined the rationale for the deal. It pointed to conflicts of interest associated with the dual listing – NTT Data will be delisted following the offer period – as well as overly complex decision-making processes, and accountability to shareholders of both companies where investment decisions are concerned.
As a wholly-owned subsidiary, NTT Data will play a central role in the group's global solutions business, while the ability to make agile investment calls in a changing world means as NTT Data grows, it will accelerate the growth of the group as a whole. Essentially, NTT is positioning NTT Data, with its AI and data centre capabilities, front and centre in its future plans.
Key targets for the company are to strengthen its presence in North America, expand AI-enabled services, and grow and upgrade its data centre infrastructure.
The Japan Times was able to add a little more colour. The agility that NTT will gain by joining forces with NTT Data will enable it carry out large-scale M&A activity and build new data centres, the paper quoted NTT Data President Yutaka Sasaki as saying during a local news conference.
Clearly then, the $16.4 billion NTT will pay for the NTT Data shares it does not already own will not be the extent of its spending. Incidentally, it will finance the tender offer through bridging loans from five Japanese financial institutions, which will eventually be replace by long-term financing.
It's a path NTT has trodden before, having bought sole control of its mobile arm NTT DoCoMo for around US$40 billion back in 2020.
This may not be a new tactic for the Japanese group, but it certainly underscores how much a major telco is willing to pay to gain an incremental advantage in AI.
Source: https://www.telecoms.com/communications-service-provider/ntt-makes-16-billion-bid-for-ntt-data
