The investment bank lost the chance to be among firms sharing hundreds of millions of dollars in fees from Alibaba Group's initial public offering when it advised and financed Charlie Ergen’s failed effort to buy Sprint Corp. last year, several people with knowledge of the matter said.
Bloomberg reports that Ergen’s bid was a challenge to SoftBank, which eventually acquired Sprint for $21.6bn, and upset the Japanese company’s founder Masayoshi Son so much that he pressed Alibaba to stop working with Barclays, the people said, asking not to be identified discussing private information. SoftBank owns about 37% of Alibaba and Son took his request directly to the company’s founder Jack Ma, the people said.
The decision to back Ergen highlights the risk of working with competing clients. To pick sides, larger banks use a process called 'business selection' in situations where they may alienate another company, with the decision typically based on which client will bring in more fees over the long term. Still, Son’s decision to punish Barclays is against the interests of Alibaba’s other shareholders, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.
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