SoftBank raises offer for Sprint Nextel to $21.6 billion

11 Jun 2013

Japanese mobile operator SoftBank Corp yesterday raised its offer for US wireless carrier Sprint Nextel Corp to $21.6 billion in order in response to a counter bid from US satellite-TV provider Dish Network Corp.

Under the terms of the revised offer, Japan's third-largest mobile phone company will pay Sprint shareholders $7.65-per share, up from the previous offer of $7.30 per share.

It will also increase its cash injection to Sprint shareholders to $16.6 billion, up by $4.5 billion, and will end up with 78 per cent of Sprint, up from 70 per cent earlier.

The renewed offer came a day before Sprint shareholders were to vote on SoftBank's earlier $20.1 billion offer.

To give Sprint stockholders time to evaluate the amended agreement, Sprint and SoftBank have agreed to adjourn the special meeting of stockholders to be convened on 12 June 2013 until 25 June 2013.

Six months after tabling its bid, Dish Network launched a $25.5 billion unsolicited counter offer for whole of Sprint Nextel.

Dish Network, the third-largest pay TV provider in the US, with 14 million customers, said that the  merger would give allow it to bring  television, high-speed Internet and mobile services into a single package and market it to Sprint's 55 million customers.

Commenting on SoftBank's revised offer, Dish Network said in a brief statement that it "will analyse the revised SoftBank bid as we consider our strategic options."

Sprint's second-biggest shareholder, Hedge fund Paulson & Co, which had earlier backed the Dish bid, said that it would now vote in favour of SoftBank's sweetened offer.

But Colorado-based Dish Network, run by billionaire Charlie Ergen, is unlikely to throw in the towel for a valuable asset and may come back with a higher bid, according to analysts.

Sprint's special committee also yesterday announced that they have unanimously determined that Dish Network's bid is not likely to lead to a ''superior offer'' and despite allowing Dish to conduct due diligence on 21 May, it has not come with a firm proposal.

''The amended agreement announced today delivers more upfront cash to Sprint stockholders, while still achieving our goal of creating a well-capitalized Sprint that is better positioned to bring meaningful competition to the US market,'' said SoftBank chairman and CEO, Masayoshi Son.

''Our transaction offers significant value for Sprint stockholders and the opportunity to realize that value in just a few weeks, without the risks associated with any other potential transaction,'' he added.

Overland Park, Kansas-based Sprint Nextel operates in the US under the Sprint, Boost Mobile, Virgin Mobile, payLo, and Assurance Wireless brands.

Sprint holds a 47.1-per cent stake in Clearwire Corporation, and an 18 per cent interest NII Holdings (International Nextel), and has more than 59 million customers.

It posted net income of $2.8 billion in 2011 on revenues of $33.6 billion. But Sprint, which has been losing money in all of the last 19 quarters, has net debt of about $15 billion, while Softbank has net debt of about $10 billion.  

Softbank, which introduced Apple's iPhone in Japan, has around 30 million users, compared to more than KDDI Corp, Japan's second-largest mobile carrier's 36 million customer base, but far below market leader NTT Docomo, which has 60.5 million users.

The transaction, which Son said will create the world's third-largest mobile-phone services provider by revenue, will have 96 million users and be in a better position to compete with industry leaders AT&T and Verizon.