March 29, 2023

DealBook: SoftBank Chief Is Defiant as Dish Challenges His Bid for Sprint

Masayoshi Son, the chief of SoftBank, the Japanese telecommunications company.Yuya Shino/ReutersMasayoshi Son, the chief of SoftBank, the Japanese telecommunications company.

Earlier this month, Charles W. Ergen’s Dish Network made a bold bid to pre-empt Softbank’s $20 billion bid for Sprint Nextel with its own offer.

But SoftBank‘s outspoken chief executive, Masayoshi Son, said on Tuesday that his proposal would prevail — unmodified.

It is the first time that the Japanese telecommunications mogul has spoken out since Dish surprised many with a $25.5 billion offer for Sprint, the country’s third-biggest cellphone service provider.

Dish has said that its cash-and-stock bid for all of Sprint, valued at $7 a share, would create a new wireless titan whose phone, data and video services would rival those from Verizon Wireless and ATT.

For now, Mr. Son insists that his proposal, a two-step process that would leave 30 percent of Sprint publicly traded, is straightforward and can be closed by mid-July. (The first part of the process, in which SoftBank invested $3.1 billion in the American company to keep it afloat, has already been competed.)

“Charlie’s proposal does not provide any new cash into the company, and it provides heavy burden of debt,” Mr. Son said in a telephone interview. “I believe our deal will go through.”

Mr. Son insisted that he was not surprised by the arrival of Mr. Ergen, who has publicly amassed a cash hoard that many assumed would finance some sort of acquisition. Though Dish had already made a play for Clearwire, Mr. Son said he guessed that the satellite-TV company had even bigger ambitions.

“My guess was right,” he said.

He repeatedly attacked Dish’s bid as unworkable and his rival’s numbers as misleading. By his own reckoning, factoring in both cost savings and potential costs like delays, SoftBank’s offer was worth $7.65 a share, while Dish’s was valued at $6.31.

Chief among Mr. Son’s criticisms was the amount of debt that the interloping offer would pile on to Sprint, which he estimated at $50 billion. In a long presentation to SoftBank’s shareholders, Mr. Son argued that his proposal would increase Sprint’s debt by three times, while Dish’s would do so by nearly six times.

“It would be prohibitively high debt,” he said.

Dish has proudly trumpeted the amount of wireless spectrum the combined company would control, but Mr. Son said that the holdings would be wastefully excessive and expensive to maintain. And it would still require spending what he estimated was $6 billion to upgrade Sprint’s network.

And Mr. Son contended that Mr. Ergen, a wily deal maker whose net worth Forbes estimates is more than $10 billion, is an amateur when it comes to the mobile industry. By contrast, he pointed repeatedly to SoftBank’s rise over the last seven years to become one of Japan’s three biggest wireless companies.

Still, much of SoftBank’s hopes are tied to Sprint’s bid to buy the remainder of Clearwire, an offer that has drawn significant shareholder opposition.

Mr. Son dismissed concerns about the proposal’s fate, saying that Sprint has not signaled any desire or need to raise its offer of $2.97 a share. The company can’t raise its bid without the blessing of its benefactor, SoftBank.

In the worst-case scenario, Sprint will raise its ownership in Clearwire to about 65 percent from 50 percent through agreements to buy out partners in the company, including Intel and Brighthouse.

Speaking of dissident investors who think Sprint’s offer is too low, Mr. Son said, “They can stay as shareholders for however long they want. We are happy with just 65 percent.”

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DealBook: Sprint Agrees to Sell Majority Stake to SoftBank

Daniel Hesse, left, the chief of Sprint Nextel, and Masayoshi Son, the president of SoftBank, announced the deal in Tokyo on Monday.Yoshikazu Tsuno/Agence France-Presse — Getty ImagesDaniel Hesse, left, the chief of Sprint Nextel, and Masayoshi Son, the president of SoftBank, announced the deal in Tokyo on Monday.

4:15 a.m. Monday | Updated

The struggling cellphone service provider Sprint Nextel has agreed to sell 70 percent of itself to SoftBank of Japan for $20.1 billion, its boldest move yet to revive its fortunes.

In a statement on Monday, SoftBank, a big Japanese telecommunications company, said it would pay $8 billion to buy newly issued Sprint stock worth about $5.25 a share. It will then pay $12.1 billion to buy existing stock from other investors at $7.30 a share, a premium to current levels.

The deal remains subject to approval by regulators and Sprint’s shareholders, but has been approved by the boards of both companies, SoftBank said in the statement. The transaction is expected to close in the middle of 2013.

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Shares in Sprint have risen 14 percent since the wireless company confirmed on Thursday that it was in negotiations with SoftBank, closing at $5.73 on Friday.

Sprint is also working to gain more control over Clearwire, a wireless broadband company in which it owns a large stake, people familiar with the matter said. But closing the transaction with SoftBank is the biggest priority for now.

Once completed, the deal would give Sprint some much-needed cash as it aims to compete against its bigger rivals, Verizon Wireless and ATT.

Sprint, which has long struggled to recover from its 2005 merger with Nextel, has been spending billions of dollars to build a next-generation data network to support the latest smartphones like the Apple iPhone 5.

It remains well behind Verizon and ATT in offering Long-Term Evolution, or LTE, data service, though the company is well ahead of T-Mobile USA, the country’s fourth-largest wireless service provider.

At the same time, Sprint is laboring under nearly $21 billion of debt, some of which is set to mature next year.

And if a proposed merger of T-Mobile and MetroPCS is completed, Sprint will face a tougher competitor in the world of lower-priced cellphone service. Both companies have pitched unlimited data plans to customers at lower costs than those for plans offered by the big two providers.

Sprint has often hinted that deal-making was in its future. Its chief executive, Daniel Hesse, has said that he expects to participate in the industry’s continuing consolidation.

But the deal with SoftBank came as a surprise to many analysts and investors. Until now, the Japanese company has been focused on gaining share in its home market, largely through acquisitions and building out an LTE high-speed data network. And until recently, it had been focused on reducing its enormous debt load, which stood at nearly $13 billion as of June 30.

Shares of SoftBank fell nearly 17 percent after it confirmed the talks last week and dropped another 5.3 percent, closing at 2,268 yen apiece, in trading in Tokyo on Monday.

Still, the Japanese company’s chief executive, Masayoshi Son, has harbored ambitions to move into the much bigger American market. Sprint has been one of the few significant players up for grabs, and may eventually serve as a vehicle for future deals — perhaps even one for the enlarged T-Mobile, several years from now.

The two sides are betting that American government regulators will favor any transaction that strengthens competition, avoiding the harsh opposition to ATT’s $39 billion bid for T-Mobile last year.

Mr. Son, an Internet entrepreneur, had already broken into an industry dominated by two established rivals when he bought Vodafone’s Japanese arm in 2006. He has steadily built the company into a major new competitor, one poised to become Japan’s second-biggest wireless service provider, after NTT DoCoMo, with the acquisition of a smaller rival, eAccess.

The Raine Group and Mizuho Securities were lead financial advisers to SoftBank. Deutsche Bank also provided legal advice. SoftBank’s legal advisers included Morrison Foerster as lead counsel, Mori Hamada Matsumoto as Japanese counsel, Dow Lohnes as regulatory counsel, Potter Anderson Corroon LLP as Delaware counsel, and Foulston Siefkin LLP as Kansas counsel.

Citigroup, Rothschild and UBS advised Sprint. Skadden, Arps, Slate, Meagher Flom was lead counsel to Sprint. Lawler, Metzger, Keeney Logan served as regulatory counsel, and Polsinelli Shughart served as Kansas counsel.

A version of this article appeared in print on 10/15/2012, on page B3 of the NewYork edition with the headline: Sprint Said to Be in Final Stages of Selling Most of Itself to SoftBank of Japan.

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