News Column

Sprint SoftBank Deal Goes to Shareholders

June 25, 2014

Mark Davis

sprint nextel

Shareholders of Sprint Nextel Corp. stand ready Tuesday to approve a $21.6 billion deal certain to reshape the large Overland Park employer.

Their vote caps months of corporate and government negotiations, Wall Street bidding wars and courthouse moves designed to put 78 percent of Sprint into the hands of Tokyo-based SoftBank Corp.

SoftBank already has delivered $3.1 billion to Sprint in something of a down payment. It promises technical and market expertise from its success in Japan, where it is the No. 3 wireless company, and $1.9 billion more when the deal closes.

To win control of Sprint, SoftBank had to satisfy U.S. concerns about national security issues. Its deal still needs regulatory approval from the Federal Communications Commission. That is expected soon.

And SoftBank had to outlast upstart rival Dish Network Corp., the satellite television company that may yet seek to play a role in Sprint's future.

Sprint had delayed its shareholder vote, originally set for June 12, over concerns that investors favored Dish's offer of $25.5 billion for all of Sprint. Dish offered more cash to investors but a weaker future for Sprint, according to many analysts.

"If you're ... looking for a viable company who's going to be competitive, I don't think Dish is the answer," Kevin Manning, with BMO Capital Markets, said in early June.

SoftBank and Sprint responded to Dish's offer by revising their deal.

Dish dropped its pursuit of Sprint last week, virtually ensuring a favorable vote at the 10 a.m. meeting at the Ritz Charles event center in Overland Park.

Its exit has cost Sprint stockholders. Shares fell to $6.86 Monday, down 11 cents to their lowest level since Dish launched its bid April 15.

At this point, however, Dish has not publicly thrown in the towel in the companies' fight for Clearwire Corp.

Clearwire is the wireless network partner of Sprint, which already owns half its stock and has agreements to nearly cinch hopes of owning the rest. Sprint, like Dish, seeks valuable wireless spectrum that Clearwire controls and that its suitors need to deliver faster wireless service.

Dish, unable to work a deal with Clearwire's board, offered to buy Clearwire shares directly from investors at $4.40 a share, outbidding the deal Sprint had with Clearwire.

Sprint sued Dish and Clearwire but then leaped ahead with a new $5-a-share merger agreement with Clearwire's board.

Analsyts say Dish may yet raise its offer but acknowledged its chances of gaining a meaningful stake in Clearwire are slim.

"I think that game is over," industry consultant Teresa Taylor of Blue Valley Advisors and a director of T-Mobile US Inc. told Bloomberg News on Monday.

Clearwire shareholders are to vote July 8 on the deal with Sprint. One shareholder advisory service recommended they approve the deal but left room for Dish to raise the ante.

"Given the cash consideration being offered by Sprint is higher than the tender offer from Dish, and therefore the best alternative currently available to maximize value, shareholders should vote for the proposed merger with Sprint," Institutional Shareholder Services said according to a release from Clearwire.

Markets weren't convinced Dish is out of the picture. Clearwire shares closed at $5.03 Monday and have not dipped below Sprint's deal price since it was announced.

To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com.

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(c)2013 The Kansas City Star (Kansas City, Mo.)

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Source: Copyright Kansas City Star (MO) 2013


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