Swiss Re AG (SSREY) shares surged higher in Zurich Thursday after the reinsurance giant said it was considering selling a portion of its business to Japan's SoftBank Group Co. (SFTBY) , which is run by billionaire investor Masayoshi Son.
The Zurich-based group confirmed portions of an earlier report by the Wall Street Journal that suggest Son's Softbank could take as much as a third of the group's equity, a deal that would be worth around $10 billion based on last night's closing price of Sfr90.24 per Swiss Re share. Other media outlets have suggested a similar stake purchase by SoftBank, which revealed plans yesterday to list it domestic telecoms business as part of a broader effort to raise cash for potential acquisitions.
Swiss Re informs that it is engaged in preliminary discussions with (SoftBank) regarding a potential minority investment in Swiss Re.," the company said in a statement. "Discussions are at a very early stage. There is no certainty that any transaction will be agreed, nor as to the terms, timing, or form of any transaction."
Swiss Re shares rose as much as 6.8% in early Zurich trading Thursday trading, the most in more than eight years, before paring that advance to around 4.61% in the opening hour to change hands at Sfr94.36 and take its six month gain to 2.9%
Son said the listing of his telecoms business, which Japanese media reports suggest could fetch as much as $20 billion, would him to spend "more time on longer-term global corporate strategy." That ambition has been partly expressed through his $100 billion Vision Fund, a tech-focused venture that has raised cash from around the world in an effort to transform the maverick billionaire into a self-described "Tech Sector Warren Buffett."
Swiss Re would be an attractive addition to Son's global ambitions in that its co-called "float" of cash held before paying out claims could give both SoftBank and his Vision Fund more firepower for further takeovers, a strategy that's been successfully employed by Buffett himself at Berkshire HathawayInc. (BRK.A - Get Report)
Swiss Re said late last year that historically low prices, combined with a series of major natural disasters over the course of 2017, would likely push global non-life premiums by "at least" 3% and life premiums by 4% over 2018 and 2019. The group will publish its annual results of Feb. 23.