Sprint Nextel Corp.
) shareholders have finally given their verdict on the merger
plans with Japanese telecom company, SoftBank Corp. In its recent
press release, the company reported that shareholders have
favored the deal through 98% votes. Once the deal is completed,
the current CEO of SoftBank, Masayoshi Son, will likely serve as
chairperson of the new Sprint. Both the companies expect the deal
to close by Jul 2013.
Earlier in June, SoftBank announced amendments in the buyout
agreement. SoftBank raised its bid offer to $21.6 billion from
its initial $20.1 billion offer in exchange of 78% stake in
Sprint, up from the initial proposal of 70% holding in the
company. The revised offer represented an increase of 35 cents
per share in the purchase price to $7.65 from $7.30. Sprint
shareholders will now have an option to receive a cash
consideration of $7.65 per share or shares in the new Sprint
holding in a 1:1 ratio, subject to terms and conditions in the
agreement. Apart from SoftBank,
Dish Network Corp.
) was also a potential contender of the Sprint buyout. Dish,
however, stepped aside after a failed attempt to woo Sprint
We believe that if successful, the deal could change the
dynamics of the wireless industry, which is dominated by two
Verzion Communications inc.
Apart from making the market more competitive, the deal would
significantly improve Sprint's liquidity and facilitate key
expansion plans that would strengthen its position. With the
potential influx of capital, the company is hopeful that the
Softbank deal would also aid its proposed purchase of Clearwire.
If the deal materializes, gaining full rights over Clearwire
would imply access to its radio frequency spectrum ranging 2.5
GHz, utilized in services that have 4G 802.16e mobile WiMAX
The acquisition will support Sprint's multi-billion dollar
restructuring program known as Network Vision. Through this plan,
the company is concentrating on the core Sprint platform, which
includes CDMA, WiMAX and Long-Term Evolution technologies, and
the eventual termination of the Nextel platform (iDEN business).
Though the company has enough liquidity to address the growing
costs of network upgrade, iPhone subsidies, debt maturities and
working capital requirements, it needs to bolster its liquidity
position for certain buyouts. The transaction would provide
Sprint the financial support to build and improve its competitive
Sprint has a Zacks Rank #3 (Hold).
DISH NETWORK CP (DISH): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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