SoftBank's Allied bid has a $5.1bn parent-cash ceiling
Bloomberg says SoftBank is weighing Allied Universal at an equity value of up to $18 billion. SoftBank has about $5.1 billion above its two-year bond-redemption floor, leaving outside money to fund the rest.
SoftBank Group is considering a purchase of Allied Universal, the largest US security services company, Bloomberg reports, citing people familiar with the matter. The deal could value Allied's equity at as much as $18 billion. Talks are preliminary, and no price has been decided.
The $18 billion is Allied's potential equity value, not SoftBank's cheque. SoftBank, Warburg Pincus, and La Caisse declined to comment, and Allied did not respond. The relevant number is what SoftBank pays from its own balance sheet.
SoftBank can put in about $5.1 billion before breaching its policy of keeping two years of bond repayments in cash. The cash is set aside to repay bonds as they mature. The $5.1 billion is the amount above that floor, not the size of SoftBank's cash balance. Sellers who roll their stakes, outside investors, or borrowing against other assets would have to supply the rest.
The $5.1 billion comes from SoftBank's 6 August earnings presentation. It puts cash at 2.3 trillion yen on 30 June, down by about a third since March. At the company's rate of 157.56 yen to the dollar, that is $14.6 billion.
That balance predates the reported talks with Allied. A different yen rate would move the dollar totals by a few hundred million dollars, but not the conclusion.
Bond redemptions over the next two years total 1.5 trillion yen, or $9.5 billion. The company's results page carries the same presentation and says the financial policy is unchanged, including the two-year cash reserve.
The gap is $5.1 billion: $14.6 billion of cash less $9.5 billion of redemptions. That is the most the parent can spend before breaking its own rule, and the practical ceiling is lower.
The headroom covers about 28% of an $18 billion equity value, so most of the equity must come from elsewhere. The cash figure is also softer than it looks because it includes about $3.1 billion of undrawn borrowing lines.
The presentation adds two limits. Some cash is in bond investments securing a prime brokerage loan of about $4.2 billion, and the cash figure does not subtract that loan. Bloomberg also calls a $65 billion commitment with OpenAI the centrepiece of Son's effort. The $5.1 billion comes before any further OpenAI calls, so it is an upper bound.
A buyer that keeps parent spending inside the rule would need sellers and partners to carry most of the price. SoftBank has done that before. Its presentation shows a $10 billion financing using OpenAI shares.
The same presentation shows $1.8 billion of LBO financing for the $5.4 billion purchase of ABB's robotics business described in Bloomberg's report. That is a third of the price. An LBO is a buyout paid for mostly with loans. Both routes spare the cash balance, while moving risk elsewhere.
A loan secured on shares is only as safe as the share price. The cash rule would therefore be protected by assets whose values can fall when they are needed.
The split between parent cash and other money decides the outcome. A quarter of an $18 billion equity value is $4.5 billion, which fits inside the headroom. A third is $6 billion, about $0.9 billion over the line, and would push cash below the redemption cover.
A third is plausible. SoftBank's financing of a third of the ABB price with LBO debt shows how a share of that size can arise.
Allied is a large staffing business. Its company pages describe a workforce of approximately 770,000 people and annual revenue of approximately $23 billion. The report says it secures New York subway contracts and has a large security footprint in data-centre developments. La Caisse invested in 2019 at a value above $7 billion, according to the report.
Allied also carries debt. Adding about $12 billion of publicly traded debt takes the report's total close to $30 billion, about 1.3 times revenue. Debt that stays in place does not draw on SoftBank's cash, though any portion refinanced by a buyer would.
Backers can shrink the parent's cheque. Warburg Pincus and La Caisse are the backers named in the report. Any stake they keep reduces what SoftBank must pay.
The strategic case is Masayoshi Son's robotics push. People familiar with the matter described security services as a proving ground where fleets of robots might replace human staff at one-off events such as concerts. One said the technology is not there yet.
The buyer would own a staffing business now and a robotics option later. The funding mix, more than the robot story, shows how seriously the parent treats its liquidity rule. Bloomberg's report places SoftBank's wider robotics holdings in the same frame, including a $200 million stake in Gravis Robotics and its Robo HD holding company.
If SoftBank signs a deal by 31 December 2026, the parent is likely to fund no more than about $5 billion of the equity. Rolled stakes, outside investors, and secured loans would cover the rest. A funding line that takes the parent above that level would put its cash position below the floor set by its own policy.