Sprint Nextel Corporation (NYSE:S) is the highlight stock of the day on the U.S. exchanges Thursday, as the wireless industry undergoes some turbulence with acquisitions and takeovers. While T-Mobile USA looks to combine resources with MetroPCS, Sprint Nextel Corporation (NYSE:S) was reportedly considering whether to make a play for the new T-Mobile after the acquisition, or make its own bid for MetroPCS.
But now, Japan’s third-largest but fastest-growing wireless carrier, Softbank, is reportedly in serious discussions to acquire a large controlling stake in Sprint Nextel Corporation (NYSE:S), the third-largest wireless carrier in the U.S. Word is that Softbank may be offering $19 billion for a two-thirds stake in the company (which comes to $9.50 per share, or a more than 50 percent premium on current prices), which has a market cap of about $15 billion. Sprint Nextel Corporation (NYSE:S) stock is up more than 17 percent as of 11:30 a.m. Eastern time.
What makes this union a natural fit is that both Sprint Nextel Corporation (NYSE:S) and Softbank have a network relationship with Clearwire Corporation (NASDAQ:CLWR) – which has seen its own stock spike more than 36 percent to north of $1.75 per share upon related reports that suggest that Softbank is also looking to make a play for Clearwire Corporation (CLWR). Both Sprint Nextel Corporation (S) and Softbank use the same frequency and the same LTE network thanks to that relationship to Clearwire.
With this impending deal, it is possible that Sprint Nextel Corporation (NYSE:S) may drop its pursuit of T-Mobile and/or MetroPCS, which would give the green light for the T-Mobile/MetroPCS merger and effect some consolidation int he wireless industry. Sprint Nextel Corporation (NYSE:S) did submit a press release confirming the discussions with Softbank but provided no other details. This could certainly be a positive wake-up call for Sprint Nextel Corporation (S) investors like billionaire fund manager David Einhorn of Greenlight Capital, simply because of the premium that may be paid on the stock but also because of the infusion of cash that would likely enable Sprint Nextel to accelerate the rollout of its 4G LTE network, on which it is several months behind market leader Verizon Communications Inc. (NYSE:VZ).