Japan’s SoftBank, which is keen to make an entry into the U.S. telecom industry, raised its bid from $20.1 billion to $21.6 billion for the third-largest U.S. carrier Sprint Nextel Corporation (NYSE:S). The foreign telecom player’s takeover bid has been contended by satellite provider DISH Network Corp (NASDAQ:DISH)’s $25.5 billion proposal.
SoftBank made this move to ensure that DISH’s rival bid becomes absolutely unattractive for the Kansas-based carrier. The revised bid was announced just a day before Sprint’s shareholders’ meet which was scheduled for June 12. The meeting has been pushed back to June 25.
So, what changes has the Tokyo-based carrier made to fend off the rival bid from DISH Network Corp (NASDAQ:DISH)?
As per SoftBank’s revised proposal, the company would increase the cash infusion by $4.5 billion to $16.6 billion. The Japanese player plans to fund its acquisition using the proceeds of its bond sales and loan from four banks. The increased cash pump is extremely crucial for Sprint Nextel Corporation (NYSE:S). This would equip the carrier with the much needed capital to fight and effectively compete with larger rivals Verizon and AT&T. SoftBank said that it would increase its stake in Sprint from 70% to 78% and buy shares from shareholders at $7.65 a share instead of $7.30 a share.
The improved offer has been approved by Sprint’s special committee board. But there is more of good news for SoftBank.
Paulson’s change of heart
SoftBank’s ‘improved financial terms’ have impressed and won the backing of Sprint Nextel Corporation (NYSE:S)’s second-largest shareholder Paulson & Co. The influential hedge fund firm said that it would vote in favor of SoftBank’s sweetened bid at the shareholders’ meet. Paulson earlier supported DISH Network Corp (NASDAQ:DISH)’s offer and considered that it would add more value to the shareholders of Sprint. The change of opinion is good news for SoftBank.
In addition, SoftBank has already secured the support of the shareholders’ advisory firm Institutional Shareholder Services (ISS). ISS considers that SoftBank’s deal would help Sprint Nextel Corporation (NYSE:S) lighten its debt burden and simultaneously deploy its LTE network with the cash infusion from the Japanese carrier. Mobile data speed in Japan is twice as much as in the U.S. So, SoftBank has the relevant expertise which could speed up Sprint’s network even faster that Verizon’s and AT&T’s.
Sprint’s new terms with SoftBank gives DISH Network Corp (NASDAQ:DISH) the chance to make the best and final proposal latest by June 18. What’s coming up for DISH?
Will DISH have to look for a new partner?
Sprint Nextel Corporation (NYSE:S) said that its Special Committee and Board of Directors do not consider DISH’s proposal as a ‘superior offer.’ In addition, DISH Network Corp (NASDAQ:DISH) has not made a formal offer yet. Since discussions between DISH and Sprint did not mature and meanwhile SoftBank improved the proposal terms, the Committee decided to end further discussion with DISH.