Wireless provider, Sprint Nextel Corporation announced that they
plan to sell a major percentage of stock to major Japanese cell
phone provider Softbank.
Tokyo based company, Softbank stated on Monday that they will be
purchasing $8 billion of shares from Sprint and an additional $12.1
billion of shares from the market. The Acquisition would make
Softbank owner of 70% of Sprint stock, and leave the shareholders
with the remaining 30%. The deal will result in 55% of current
Sprint shares to be exchanged for $7.30 per share in cash, and the
remaining shares to be converted into new publicly traded entity.
Completion of the deal is expected to be in mid 2013.
This acquisition, would allow Softbank to enter the US market,
with hopes of making the company one of the largest telecom
companies worldwide. In addition, the deal could put them in a
better position to compete with their largest competitors Verizon (
) and AT&T (
Analysts at Jefferies weighed in this morning, upgrading Sprint
from a "Hold" to "Outperform." On the contrary, Moody's is
considering a possible downgrade for Softbank.
The deal has already been approved by the Board of Directors in
both companies, and is now subject to stockholder and customary
While Sprint currently does not pay a dividend, it's two major
competitors VZ and T do. Stock's of Verizon and AT&T were both
down by 1.4% and 0.5% when the acquisition was announced Monday
morning. However, the two companies account for 75% of the US
telecom providers, while Sprint only accounts for 15%. At this
time, there is no indication that this deal will do major harm to
VZ and T.
Sprint shares were up 2 cents or 0.35% to $5.75 Monday
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here