Yahoo Stake in Japanese Brokerage YJFX Parent Could be Up for Sale

Monday morning saw the biggest headline in tech this summer, as Yahoo has confirmed that it is selling its ‘core business’ to Verizon. With the deal valued at just above $4.8 billion. Currently the move is not likely to affect the retail foreign exchange brokerage business of Yahoo Japan in a material way.

Following the sale of Yahoo to Verizon, Yahoo Japan could also be up for sale. Being established as a joint venture between Yahoo and Japanese telecommunications and internet giant Softbank, the latter is seen as a ‘natural buyer’ of the Tokyo headquartered unit. Any prospective deal however is not likely to materially affect the business of YJFX.

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Alternatively, the $8 billion stake in the company could be sold to other Japanese investors, as the business is very narrowly focused on the world’s third largest economy.

Softbank – a Natural Buyer

Softbank has formed a joint venture with Yahoo to establish Yahoo Japan and currently is estimated to hold a 43 per cent stake in the company, which owns the second most visited website in the country after Google Japan, according to web analytics firm SimilarWeb.

Following the acquisition by Verizon, the remaining assets of Yahoo are actually much bigger than the “core business” unit in the headlines. The new entity which will remain after the deal is going to be a publicly traded investment firm which will be comprised of two major assets – a 15 per cent stake in Chinese online marketplace Alibaba valued at $32 billion and a 35.5 per cent stake in Yahoo Japan valued at about $8 billion.

YJFX is 100 per cent owned by Yahoo Japan. The retail FX brokerage was started in 2003 and is part of the parent company’s financial and payment-related services. Yahoo Japan does not report results from the dealings of its FX brokerage subsidiary in detail.

The unit is part of the ‘Other Business’ segment of Yahoo Japan, which accounts for 8 per cent of the revenue and 5 per cent of the net income of the parent firm. Last year, the segment generated about $270 million of revenues (¥32.3 billion) with the operating income amounting to $96.6 million (¥11.6 billion).