Yoshikazu Tsuno/Agence France-Presse — Getty ImagesMasayoshi Son of SoftBank, left, and Dan Hesse, chief executive of Sprint Nextel, announced their companies’ deal last October.
Eight months ago, Sprint Nextel’s path to recovery seemed clear: a sale to SoftBank of Japan and a deal to buy full control of the wireless network operator Clearwire.
Now that road appears significantly muddier, only days before shareholders are scheduled to vote on the two transactions, leaving both Sprint and SoftBank to weigh backup plans.
Much of the confusion has arisen because of Dish Network, which has bid for both Sprint itself and for Clearwire. Nearly two weeks ago, Dish raised its offer for Clearwire to $4.40 a share, stirring doubt that Sprint can prevail at a Thursday vote with its current bid of $3.40 a share.
Sprint directors have been waiting for Dish to formalize a $25.5 billion takeover proposal for Sprint itself. If that appears, it would top SoftBank’s $20.1 billion bid.
Sprint shareholders are scheduled to vote on the SoftBank offer on Wednesday, though the meeting may be postponed to give Dish more time to make its bid formal. Clearwire shareholders are set to vote on Sprint’s bid on Thursday.
SoftBank and its chief executive, Masayoshi Son, desire Sprint, the cellphone service company, as the cornerstone of a plan to challenge ATT and Verizon Wireless in the United States. For Sprint, buying the roughly 50 percent of Clearwire that it does not already own would provide crucial extra bandwidth to build out a next-generation data network.
But Charles W. Ergen, the chairman of Dish, has managed to upend the carefully laid out plans of Sprint and SoftBank. Dish’s cash-and-stock bid for Sprint is worth about $7 a share, compared with SoftBank’s offer of roughly $6.45 a share.
Dish has sought a cellphone network partner that can help it take advantage of its big wireless spectrum holdings, helping transform the satellite television company into a provider of broader wireless services.
Still, people close to Sprint and SoftBank have expressed bewilderment at the moves by Mr. Ergen, a onetime professional gambler. Dish surprised many with the unveiling of its bid for Sprint in April, then embarked on an unusually pointed campaign aimed at raising national security concerns about the SoftBank deal. (The transaction eventually won clearance from the Committee on Foreign Investment in the United States, which oversees the review process.)
Dish first bid for Clearwire earlier this year, then went silent for months before raising its offer two weeks ago.
SoftBank has staunchly defended its bid for Sprint, repeatedly assailing Dish’s offer as unworkable, and won the conditional support of an influential shareholder advisory firm. The Japanese company has argued that it can close its deal by next month, while its rival would need much more time, costing Sprint shareholders money.
But SoftBank has been laying the groundwork for a potential backup plan: It has been in talks with Deutsche Telekom about potential options for the German telecommunication concern’s majority stake in T-Mobile US, according to a person briefed on the matter.
SoftBank and Deutsche Telekom were in talks even before the Sprint deal was announced last fall, and the two have kept in regular touch since, this person said. The Japanese company has stressed that it wants to find an entry point into the United States market, even if its bid for Sprint fails.
Word of SoftBank’s interest in buying Deutsche Telekom’s 74 percent stake in T-Mobile US, however, may simply be an attempt to sway recalcitrant Sprint shareholders.
Sprint shares closed on Friday at $7.24, more than 12 percent above SoftBank’s bid. Shareholders have argued that SoftBank must offer more for Sprint, especially in light of Dish’s higher bid.
Shares in Clearwire closed on Friday at $4.40, the clearest sign of investor dissatisfaction with Sprint’s latest bid.
Sprint has challenged the legality of Dish’s bid for Clearwire, contending that it violates an existing shareholder agreement. Dish has argued otherwise.
But Mr. Son of SoftBank has publicly said that he would be satisfied with Sprint owning less than 100 percent of Clearwire. Existing pacts with other big shareholders would furnish Sprint with more than 65 percent of Clearwire.
Still, Dish could prove a formidable hindrance to Sprint if it becomes a big minority shareholder in Clearwire, possibly forcing the company into a partnership or an expensive deal to buy out its unwelcome dance partner.
That is, if Dish doesn’t buy control of Sprint.
A version of this article appeared in print on 06/10/2013, on page B3 of the NewYork edition with the headline: Sprint and SoftBank Weigh Alternatives to a Deal.
Article source: http://dealbook.nytimes.com/2013/06/09/sprint-and-softbank-weigh-alternatives-to-a-deal/?partner=rss&emc=rss
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