SoftBank Group Corp. (OTC:SFTBF) (OTC:SFTBY) has paused acquisition discussions with U.S. data center operator Switch after founder Masayoshi Son pursued a deal valued at around $50 billion for several months.
Son had sought direct control of Switch's energy-efficient data center network to support Stargate's goal of generating computing power for OpenAI, Bloomberg reported on Monday, citing sources familiar with the matter. Earlier this month, Son pulled a planned January announcement and accepted that a full purchase would not move forward.
Partnership or Minority Investment Still Under Discussion
The same people said SoftBank and Switch remain in active talks about a smaller investment or partnership.
In December, SoftBank agreed to buy global alternative asset manager DigitalBridge Group in a $4 billion deal. Reportedly, DigitalBridge backs Switch.
Deal Concerns and Broader AI Strategy Shape Next Steps
People familiar with the situation told Bloomberg that some within SoftBank were concerned about the sheer size of the deal and the operational challenge of managing data center campuses across multiple U.S. cities. They also said Switch has been preparing for a potential IPO by 2026 and that its backers have discussed a valuation of about $60 billion.
SoftBank has moved aggressively to reposition itself around artificial intelligence, completing a $40 billion investment in OpenAI that secured a stake of more than 10% at a $260 billion pre-money valuation.
The company funded the deal by reshaping its balance sheet, selling its entire Nvidia Corp. (NASDAQ:NVDA) stake, scaling back Vision Fund activity, unloading billions of dollars in T-Mobile US, Inc. (NASDAQ:TMUS) shares, and tightening capital allocation.
SoftBank has also lined up additional liquidity options, including potential asset sales, a PayPay IPO, and margin loans backed by its Arm Holdings Plc (NASDAQ:ARM) stake, to concentrate resources on AI infrastructure projects.
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