DISH Network Corp. (DISH) Drops Sprint Nextel Corporation (S), Sets Eyes on Clearwire Corporation (CLWR)

Page 1 of 2

The tug of war between Softbank and DISH Network Corp. (NASDAQ:DISH) finally comes to an end as the satellite provider declined to make a higher bid for Sprint Nextel Corporation (NYSE:S). After receiving Softbank’s sweetened proposal of $21.6 billion for a 78% stake in the company, Sprint asked Dish to make its best and final offer by June 18. However, DISH Network Corp. (NASDAQ:DISH) said that it would not revise its bid as it is ‘impracticable’ to make an improved offer within the time span offered by Sprint Nextel Corporation (NYSE:S). This leaves the path clear for Softbank, which has keen interest to enter the US wireless industry and work on the growth prospects of Sprint to contend AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ).


Softbank in progress

After months of fighting over Sprint Nextel Corporation (NYSE:S)’s control, Softbank finally manages to cross both regulatory and competitive roadblocks. Early June, the Japanese carrier raised its bid by $1.5 billion to $21.6 billion to compete with Dish’s bid of $25.5 billion and win shareholder support during the vote, which has been rescheduled for June 25. In addition, the Tokyo based telecom operator also improved the cash component by $4.5 billion to $16.6 billion for an increased stake of 78%.

The revised deal is too compelling for Sprint to demand more from Softbank, and too competitive for DISH Network Corp. (NASDAQ:DISH) to counterbid. Not only is Dish out of Softbank’s way, but a key shareholder Paulson & Co which had earlier raised concerns about Softbank’s proposal is in favor of the revised deal now. As per a filing from Sprint Nextel Corporation (NYSE:S), in case DISH Network Corp. (NASDAQ:DISH) made a higher offer to counter Softbank’s revised $21.6 billion, the Kansas carrier’s board could have ceased its combination with Softbank. But now after the satellite TV operator declined to respond within the deadline, the board does not have the authority to block the Sprint-Softbank merger.

All it needs now is “the FCC and shareholder approvals which will allow us to close in early July and begin the hard work of building the new Sprint into a meaningful 3rd competitor in the US market.” Softbank is pretty confident about the synergies of combination and assures investors that Sprint Nextel Corporation (NYSE:S) would substantially save on smartphones and other equipment through discounts on bulk buy. Moreover, Softbank’s relevant expertise and knowledge in the wireless arena would mold Sprint into a stronger competitor and fight dominant players.

The Kansas carrier’s main purpose to set a deadline for Dish to make an ‘actionable’ proposal was to wrap up the DISH Network Corp. (NASDAQ:DISH) story by June 18 and conclude the deal with Softbank at the earliest. So while Sprint Nextel Corporation (NYSE:S)chose to get into a relation with Softbank, what’s next for Dish?

In pursuit of Clearwire

The satellite TV operator isn’t totally out of the game yet. Though it has decided not to fight for Sprint any further, it has set its eyes on Clearwire Corporation (NASDAQ:CLWR) in which the Kansas carrier owns a majority stake. Both Sprint and DISH Network Corp. (NASDAQ:DISH) are competing to acquire the spectrum-rich Bellevue based carrier. Sprint Nextel Corporation (NYSE:S) increased its bid from $2.97 a share to $3.40 a share to win the favor of Clearwire’s minority shareholders who believe that the proposal grossly undervalues the latter’s spectrum holding.

Page 1 of 2