Japanese cellphone company SoftBank Corp. has finally loosened
its proposed terms with
Sprint Nextel Corp.
), providing the latter a scope to consider
) bid. Although, Sprint had previously drawn a waiver from
SoftBank to seek more information on DISH's proposal, it did not
receive any relaxation on terms that would allow it to disclose
non-public information. Further, Sprint was also not allowed to
consider the acquisition bid offer from DISH.
In Oct 2012, it was reported that the company was in
negotiations to sell about 70% of its stake to Softbank for a
total consideration of $20.1 billion. However, this offer was
trumped by DISH which made a counter offer of $7 per share
(inclusive of $4.76 in cash and 0.05953 shares in DISH for each
Despite some of the major shareholder's of Sprint walking in
favor of the DISH proposal considering it lucrative, the company
specified that its support toward SoftBank's acquisition proposal
remains unchanged. The reason behind such consideration could be
the negatives attached to the DISH offer.
While the successful completion of the deal might enable
Sprint to overcome its spectrum shortage issue and gain financial
strength, the deal will also result in a few negative synergies
for both the companies. The complete acquisition of Sprint Nextel
will inflate DISH Network's leverage position by a huge margin as
the combined debt of both the companies will stand at nearly $28
billion. Further, the merged company will have to pay nearly $600
million as break-up fee to SoftBank, if it wishes to terminate
its arrangements with the latter.
We believe the fate of the Sprint, Softbank and DISH trilogy
will meet some conclusion in mid summer when Sprint shareholders
vote for the approval of the SoftBank deal on Jun 12. Meanwhile,
DISH and SoftBank both are gearing up for their big buyout.
According to market reports, SoftBank raised around $3.3
billion in Apr 2012 in a dual-tranche bond issued in dollars and
Euros to fund the Sprint acquisition, following issuance of 300
billion yen in bonds March. Recent reports suggest that the
company is also issuing 400 billion yen ($3.9 billion) in bonds
to retail investors to fund its billion dollar Sprint buyout
On the other hand, DISH is also adopting similar strategies to
fund its proposed deal. DISH Network raised $2.3 billion debt
from the market and is further negotiating with firms like
Barclays Plc, Macquarie Group, Jefferies and the Royal Bank of
Canada to facilitate around $9 billion in debt to get through the
Sprint, which operates with telecom giants
) currently 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
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