SoftBank’s Major Data Center Acquisition Hits a Snag

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In a significant development for its artificial intelligence infrastructure ambitions, SoftBank Group Corp. has suspended negotiations to acquire U.S. data center operator Switch Inc. The proposed deal, valued at approximately $50 billion, has been put on hold, sending the Japanese conglomerate's shares lower and raising questions about the execution of its global AI strategy.

Trading in Tokyo reflected immediate investor concern, with SoftBank's stock declining 4.89% to close at 4,065 yen. The sell-off was directly tied to news of the paused acquisition talks.

Analysts point to the sheer financial scale of the transaction and the operational complexities involved in integrating a major U.S. infrastructure provider as primary reasons for the delay. This acquisition was intended to be a cornerstone in SoftBank's expansive blueprint for AI dominance.

Key Details of the Halted Deal:
* Target: Switch Inc., a U.S.-based data center operator.
* Reported Deal Size: Roughly $50 billion.
* Stock Impact: SoftBank shares fell 4.89% to 4,065 yen.
* Current Status: Talks are paused, with the focus shifting to alternative structures.

Implications for the "Stargate" AI Initiative

The suspension deals a notable setback to SoftBank's "Stargate" project. Media reports suggest this flagship program could involve investments nearing $500 billion, aimed at constructing a worldwide AI infrastructure network to supply massive computing power for partners, including OpenAI.

Switch, with its portfolio of energy-efficient data centers at key U.S. locations, was seen as a vital physical infrastructure component. Without a full takeover, SoftBank must now reconfigure the project's foundational plan, potentially relying more heavily on partnerships rather than outright ownership.

Switch Eyes Public Markets as Talks Stall

Concurrent with the negotiation pause, Switch is reportedly turning its attention toward the public equity markets. The data center operator is said to be preparing for an initial public offering (IPO) targeted for 2026. Company investors are aiming for a valuation that could reach up to $60 billion.

Sources indicate that discussions between SoftBank and Switch have not been terminated entirely. Instead of a full acquisition, alternative arrangements are now under consideration:
* A minority stake investment by SoftBank into Switch.
* A strategic partnership to secure guaranteed data center capacity.

Such alternatives could allow SoftBank to access Switch's infrastructure without burdening its balance sheet with a colossal outright purchase.

Portfolio Reshuffling to Fund AI Ambitions

The developments surrounding Switch occur during a period of intense portfolio restructuring at SoftBank. To finance its aggressive AI push—which includes a planned investment in OpenAI by late 2025—the group is divesting significant holdings.

Recent moves include:
* A complete exit from its position in chipmaker Nvidia.
* The sale of shares in T-Mobile US to bolster liquidity.

Simultaneously, SoftBank is advancing other infrastructure transactions. The group recently announced a binding agreement for the full acquisition of DigitalBridge Group Inc. for approximately $4 billion. DigitalBridge, a global asset manager specializing in digital and AI infrastructure, is expected to significantly enhance SoftBank's capabilities in this sector.

Strategic Outlook: Adapting the AI Infrastructure Blueprint

SoftBank is currently reassessing the original infrastructure roadmap for its "Stargate" project. However, it is concurrently pursuing alternative pathways, such as the DigitalBridge acquisition and potential collaborative models with Switch. A critical challenge for the conglomerate will be balancing capital discipline with the urgent need to rapidly scale its AI infrastructure, especially with major project launches and capacity expansions slated to begin from 2026 onward.