Acquiring the Fortress Investment Group for 3.3 billion was it a solid deal?

When Masayoshi Son founded SoftBank in 1981, he may not have known where its growth would lead him. At the time they were just a wholesaler of PC software. The expansion of the bank, however, became tangible in the 90’s when the company acquired the majority share of Yahoo. The growth would continue, and today it is one of the largest holders of internet company shares. They own a piece of at least 400 companies.

Masayoshi Son however always looked towards diversification. His first step was evident when in 2017 they acquired the Fortress Investment Group for 3.3 billion dollars adding a more than 30 percent premium on the share price. The acquisition of an alternative asset management company whose portfolio is as diverse as it can get was the clearest indication of where SoftBank was headed.

Started in 1998 the Fortress Investment Group has grown to become one of the largest private equity groups in the country. Today the company manages more than 43 billion dollars in assets. These assets range from permanent investment vehicles which are mostly publicly traded companies to distressed assets which are in most cases undervalued. The Group has over the years proved that their unconventional style of investing could pay off in a big way.

Once shareholders gave the acquisition by SoftBank the green light, the next hurdle was the foreign investments Committee. This is the group responsible for vetting all deals being made at an international level, especially if they involve the acquisition of an American firm by a foreign one. To fulfill this SoftBank had to agree to some concessions which meant that the day to day operations of the firm would be left to the founding partners as well as the already established board. This was something the investor was willing to accept as the management has already proved capable of running the group by the time of purchase.

SoftBank has been able to inject private funds into the Fortress Investment Group, which has enabled them to become more aggressive as they pursue larger deals. Wes Edens, one of the founding partners, has also gone on record to state that since the acquisition of the Fortress Investment Group, it has enjoyed the best twelve months of its existence. This in part he notes was a consequence of the group returning to private hands. The decision makers are now able to make more decisions without having to convince shareholders of the same.

LinkedIn: https://www.linkedin.com/company/fortress-investment-group