Softbank Corp (USA) (OTCMKTS:SFTBF)“s plan to keep an alternative in case its deal with Sprint Nextel Corporation (NYSE:S) falls through is one of the hot topics in the wireless industry. The Japanese telecom player is thinking of making a bid for T MOBILE US INC (NYSE:TMUS) if its attempt to acquire a 70% stake in Sprint Nextel Corporation (NYSE:S) fails. This clearly indicates that Softbank Corp (USA) (OTCMKTS:SFTBF) is extremely keen to enter the US wireless market.
Softbank Corp (USA) (OTCMKTS:SFTBF) had made an acquisition proposal last October to buy a 70% stake in the Kansas carrier for $20.1 billion, but DISH Network Corp (NASDAQ:DISH) made a counterbid of $25.5 billion as part of its strategy to enter the telecom industry. Though Sprint Nextel Corporation (NYSE:S) recommends Softbank Corp (USA) (OTCMKTS:SFTBF)’s proposal, it is said to be considering DISH Network Corp (NASDAQ:DISH)’s offer as well. Also, there are several shareholders who prefer DISH Network Corp (NASDAQ:DISH)’s higher offer. The June 12 shareholders’ vote is to decide the fate of the Sprint Nextel Corporation (NYSE:S)-Softbank Corp (USA) (OTCMKTS:SFTBF) combination and clear all doubts as to what shareholders want. This is the primary reason why the Japanese giant has made a backup plan.
This is not the first time that Softbank Corp (USA) (OTCMKTS:SFTBF) is showing its interest in the fourth largest US carrier. The foreign player had earlier considered buying T MOBILE US INC (NYSE:TMUS) but took a step back when the latter was preparing for its reverse merger with pay-as-you-go carrier METROPCS COMM. DL-,0001(FRA:PU9). The T-Mobile/METROPCS COMM. DL-,0001(FRA:PU9) combination is now complete, and talks between Softbank and T MOBILE US INC (NYSE:TMUS) have intensified recently.
There are solid reasons as to why Softbank has made a move towards T-Mobile. Firstly, the carrier is desperate to do business in the US telecom market. Second, it wants to keep an alternative as some Sprint Nextel Corporation (NYSE:S) investors have an inclination for Dish’s proposal. Thirdly, Softbank can enter into a separate agreement with the controlling stakeholders of T-Mobile to ensure that there is no possibility for a counteroffer. Finally, in case its combination with Sprint Nextel Corporation (NYSE:S) fails, Softbank would be compensated by nearly $5 billion, which would come from a convertible bond and currency hedges to cover the deal risks. Softbank could utilize these gains to acquire T-Mobile.
So where does Sprint stand now? Dish is blocking both the mergers in which Sprint is involved. Not only is it blocking Softbank from acquiring Sprint, but the satellite provider has made a counterbid for Clearwire Corporation (NASDAQ:CLWR) as well.
