SoftBank Corp buys $514 mln majority stake in car software firm Cubic Telecom (updated)

PJT Partners

05/12/2023 07:55

(Updates with details on SoftBank investment paragraphs 14-16)
    By Nick Carey and Anton Bridge
       LONDON/TOKYO, Dec 5 (Reuters) - SoftBank Corp  9434.T 
will invest roughly 473 million euros  ($514 million) to take a
51% equity stake in Cubic Telecom that will give the
Dublin-based connected-vehicle technology provider greater
access to Asian automakers.
    The Japanese telecommunications arm of tech investment giant
SoftBank Group  9984.T  and Cubic "will form a strategic global
partnership to pioneer the future of software-defined connected
vehicles", the two companies said on Tuesday.
    The deal gives Cubic a valuation of over 900 million euros.
    "In line with our 'Beyond Japan' strategic growth
initiative, we are extremely pleased to be teaming up with Cubic
Telecom to make a full-fledged entry into the fast-growing
market for ... connectivity," SoftBank Corp CEO Junichi Miyakawa
said in a statement.
    Barry Napier will remain as CEO and a board member of Cubic
Telecom after the investment closes. 
    SoftBank will gain three seats on the board, while three
more seats will continue be held by existing shareholders,
including Volkswagen  VOWG_p.DE  software unit Cariad and
Qualcomm  QCOM.O .
    More cars are becoming connected and this will increase
exponentially with the transition to electric vehicles. EVs are
essentially computers on wheels - which has given rise to the
industry term "software-defined vehicle" - that automakers can
upgrade wirelessly.
    Consulting firm McKinsey & Co has estimated that 95% of new
vehicles sold globally will be connected by 2030.
    The industry is also exploring new ways to generate revenue
from in-vehicle services such as advanced map or fuel-efficiency
features.
    Cubic's software serves as the pipeline to make those things
happen and gives automakers access to mobile networks across 190
countries, Napier told Reuters. That software provides access
for infotainment features and enables automakers to see which
features are used so they can tailor future offerings, he said. 
    The company currently connects more than 17 million vehicles
and Napier said Cubic can update the car from the assembly all
the way through its lifetime.
    "We can update the car in the production line, we can update
the car on the ship, we can update the car when it arrives
anywhere," Napier said. 
    "Having that relationship with SoftBank gives us a segue
into all those Asian manufacturers, which is a struggle for an
Irish company to do on its own," he added. 
    The deal marks SoftBank Corp's largest overseas investment
since its public listing in 2018, although it is far more modest
than some of those made by parent SoftBank Group and its Vision
Fund investment vehicle.
    The companies said they would look to "leverage
opportunities" across the broader SoftBank group.
    Cubic will become a consolidated subsidiary of SoftBank
Corp, and the deal is set to close in the first half of 2024.   
    Jefferies served as lead financial adviser to Cubic on the
deal, while PJT Partners acted as lead financial adviser to
SoftBank. 

($1 = 0.9199 euros)

 (Reporting By Nick Carey; Editing by Nick Zieminski)
 ((nick.carey@thomsonreuters.com; +44 7385 414 954;))