Transfer of Subsidiary to Yahoo Japan Corporation Towards the Establishment of Strategic Base for the Next Generation Internet business

SOFTBANK CORP., (hereafter ‘the Company’ announces that the shares of its wholly-owned subsidiary, SOFTBANK IDC Solutions Corp. (Head office; Shinjuku-ku, Tokyo, Representative; Yutaka Shinto, company name changed from SOFTBANK IDC Corp. on February 2, 2009) will be transferred to its consolidated subsidiary, Yahoo Japan Corporation (Head office; Minato-ku, Tokyo, Representative; Masahiro Inoue, hereafter ‘Yahoo! JAPAN’).
The decision this time will enable the early establishment of the SOFTBANK Group's strategic base for the next generation Internet business, and allow it to make further efforts towards sustainable growth and enhancement of competitiveness of the Internet business and data center business through maximizing the synergy effect of the Group.

1. Summary of 3 companies

The Company is the holding company of the SOFTBANK Group with 105 consolidated subsidiaries and 78 equity-method affiliates. Main subsidiaries are; SOFTBANK MOBILE Corp., a mobile communications business operator, SOFTBANK BB Corp., a broadband infrastructure business operator, SOFTBANK TELECOM Corp., a fixed-line telecommunications operator and Yahoo Japan Corporation, an Internet Culture business operator. Setting the Internet at the core of its business base, the Company is endeavoring towards the IT revolution.

Yahoo Japan Corporation is a subsidiary of the Company founded in January 1996 as a joint venture with Yahoo! Inc. in the U.S. Since its launch of the information search service in Japanese in April 1996 (service name: Yahoo! JAPAN), the service became the center of commercial Internet services in Japan, and ranks overwhelmingly as number 1 with a total monthly page view of 43,365 million and a unique browser number of 189.32 million as of January 2009.

SOFTBANK IDC Solutions Corp. was founded in November 1991. It has been in business for 22 years as a pioneer in the data center business in Japan, and is one of the largest data center companies in Japan with 9 data centers nationwide. It provides high quality data center solutions including network security, operation and maintenance. Last October, an environment-responsive data center complex, ‘Asian Frontierwas’ completed in Kita-Kyushu city, Fukuoka Prefecture, which enables the provision of just-on-demand facilities to respond to customer needs by adopting module type centers so that an environment-conscious and cutting-edge facility can be provided including full security and safety. This company changed its company name from SOFTBANK IDC Corp. on February 2, 2009.

2. Merits for Yahoo! JAPAN and the SOFTBANK Group

(1) Merits for Yahoo! JAPAN

In the Internet business domain, importance of the data center business is highly recognized due to the technical innovations, the changes in processing data volume and the growing demand from companies who require measurements preventing information leakage and seek stable business operation. Also, through the increase of video content on the Internet and the penetration of consumer generated media and community services, the demand for data centers in the Internet business is further growing.

In these circumstances, Yahoo! JAPAN is considering full-fledged entry into cloud computing and open platforms including SaaS which are expanding worldwide in the next generation Internet business domain, therefore the Yahoo! JAPAN Group sees the need to establish a strategic base for the data center business.

Previously, Yahoo! JAPAN procured data centers from operators like IDC, instead of possessing its own. However, the decision this time allows Yahoo! JAPAN to possess its own data center, and secure a flexible system and facility in order to subjectively respond to future demand increase and service enhancement. Yahoo! JAPAN believes it will enable large reduction in data center related costs, efficient procurement, speedy service introduction, and systematic business execution in all areas of its business.

As for the large cost reduction, Yahoo! JAPAN will be able to enjoy several merits including; 1) economy of scale through the rational allocation of huge volume of demands which Yahoo! JAPAN has, and 2) efficiency in data center business by applying ‘unique operational management technology for the large volume server’, both of which are only available when Yahoo! JAPAN acquires IDC.

IDC has already expanded its business domain from facility provision to platforms, and has experience in providing several SaaS related services. Cloud computing domain including SaaS is expected to grow hundreds of billions of yen in size in the future due to the market expansion. Therefore, through this merger, significant progress in Yahoo! JAPAN's detailed deliberations on entering this domain is expected; especially relating to the provision of base, service development, and the sales side of the business.

(2) Merits for the SOFTBANK Group

Drastic expansion of the business domain as a data center and establishment of a strong base as an Internet company group will be realized through direct operation of the data center business by Yahoo! JAPAN.

SOFTBANK will further strive to maintain high quality and high competitiveness, maximize the value of the Group as a whole and utilize the synergy effect of the Group for sustainable growth and enhanced competitiveness of the Internet business and the data center business.

3. Details of the subsidiary transfer to Yahoo! JAPAN

4. Business results of the subsidiary transfer to Yahoo! JAPAN

5. Summary of transferee

6. Transfer price

JPY 45 billion
Transfer price was decided through negotiation based on the fair market value of net assets at the time of transfer (including potential deferred tax assets), future cash flows (including synergy effect with the Yahoo! JAPAN Group), and the evaluations calculated by third parties.

7. Number of shares held

8. Schedule of transfer (tentative)

9. Impact on business results

Associated with this transfer of shares, the Company estimates to record approximately JPY 32.3 billion of profit on sale of shares of an affiliated company as special income in the earnings results for FY2008 ending in March 2009 on non-consolidated basis. As for the earnings results on consolidated basis, the aforementioned gain on sale of shares of an affiliated company will offset each other as internal transactions.