April 15, 2024

DealBook: SoftBank Raises Bid for Sprint to $21.6 Billion

A SoftBank branch in Tokyo.Toru Hanai/ReutersA SoftBank branch in Tokyo.

9:58 p.m. | Updated

SoftBank of Japan agreed late on Monday to sweeten its takeover bid for Sprint Nextel to $21.6 billion, seeking to block a rival bid by Dish Network.

Under the revised terms of the complex transaction, SoftBank agreed to shift over about $1.5 billion earmarked for Sprint itself to the company’s shareholders instead. Existing investors can now sell their shares at $7.65 apiece, up nearly 5 percent from the first offer.

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All told, the new offer is valued at about $7.48 a share, up almost 19 percent from the original bid. SoftBank would own about 78 percent of Sprint if the deal is approved.

Sprint added that it had ended sales talks with Dish, which surprised many in April by offering $25.5 billion for all of the cellphone service provider, or about $7 a share. In a statement, Sprint said that its newer suitor has failed to put forward an acceptable formal bid despite weeks of conducting due diligence.

The new proposal by SoftBank, cobbled together largely over the weekend, is aimed at preserving SoftBank’s biggest gamble: buying control of Sprint to challenge the existing titans of the American cellphone market, ATT and Verizon Wireless. Its plans included infusing Sprint with billions of dollars to build out a nascent high-speed data network.

SoftBank reiterated that it intended to invest $1.9 billion in Sprint if its deal closed, in addition to the $3.1 billion it already invested into the company.

The Japanese company has been frustrated by the emergence of Dish as a bidder, which has sought to stymie that plan on a number of fronts. Led by Charles W. Ergen, Dish network’s chairman, has contended that its deal would create a new behemoth that could offer a variety of wireless services, like cellphone coverage and satellite TV.

Shares in Sprint have traded above SoftBank’s previous offer, the result of investor dissatisfaction. The company’s stock closed on Monday at $7.18, before the new proposal was revealed.

SoftBank is betting that its improved offer will knock out its rival. Among its advantages is the speed with which the deal can be closed: SoftBank expects to close the transaction early next month, while Dish would most likely need months to complete its bid.

“The amended agreement announced today delivers more upfront cash to Sprint stockholders, while still achieving our goal of creating a well-capitalized Sprint that is better positioned to bring meaningful competition to the U.S. market,” Masayoshi Son, SoftBank’s chief executive, said in a statement.

The deal has been approved by a special committee of Sprint’s board. A vote on the proposed sale has been rescheduled from Wednesday to June 25.

The offer may be enough to win over Sprint investors who were skeptical of the previous bid. Paulson Company, the hedge fund that is the company’s second-biggest shareholder, said in a statement that it would support the new SoftBank offer.

Still, Dish has until June 18 to propose an acceptable “best and final” bid. The amended agreement with SoftBank puts in place a number of additional restrictions, including forcing Dish to present fully committed financing and the adoption of defenses that would limit a hostile bid.

Article source: http://dealbook.nytimes.com/2013/06/10/softbank-raises-bid-for-sprint-to-21-6-billion/?partner=rss&emc=rss

DealBook: Dish Offers to Buy Sprint, Joining Phone to TV Service

9:35 p.m. | Updated

Smartphones, tablets and computers all pull data from the Internet, but people still pay two different bills: the high-speed connection they get at home and the wireless connection they get outside. Dish Network, the pay-TV operator, wants to bridge that gap.

Dish Network said on Monday that it had submitted a $25.5 billion bid for Sprint Nextel, the nation’s third-largest wireless carrier after Verizon Wireless and ATT. It says that a merger between the two companies could roll television, high-speed Internet and cellphone services into a single package that would be faster and more affordable for consumers.

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“It really means that we’re going to give consumers what every consumer wants,” Charles W. Ergen, Dish Network’s chairman, said in a phone interview. “They want broadband and video and voice in their home and want the exact same thing outside the home. And they want it to look and feel and priced outside the same as it is inside.”

Dish Network’s bid is an effort to scuttle the planned takeover of Sprint Nextel by the Japanese telecommunications company SoftBank, which agreed in October to acquire a 70 percent stake in the American cellphone operator in a complex deal worth about $20 billion.

Under the terms of its proposed bid, Dish Network said it was offering a cash-and-stock deal worth about 13 percent more than SoftBank’s bid.

Dish Network values its offer at $7 a share, including $4.76 in cash and the remainder in its shares. The offer is 12.5 percent above Sprint Nextel’s closing share price on Friday.

“The Dish proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal,” Mr. Ergen said in a statement.

Mr. Ergen said a “Dish/Sprint merger will create the only company that can offer customers a convenient, fully integrated, nationwide bundle of in- and out-of-home video, broadband and voice services.”

Dish Network said it would be able to combine its existing broadband and TV offerings with Sprint Nextel’s cellphone operations, allowing it to better compete with rivals like Verizon that are moving into new areas in search of revenue.

Dish Network’s effort to take over Sprint is the latest of many moves toward consolidation in the highly competitive broadband industry. In 2011, ATT tried to buy its rival T-Mobile USA, a move that was blocked by the Justice Department because of antitrust concerns. Last year, Verizon scored a deal with a group of cable companies that agreed to sell it spectrum licenses to build its wireless network in exchange for allowing them to sell their cable services inside Verizon stores.

The big question surrounding the communications industry is whether partnerships and mergers are good not just for businesses, but also for the customers. Opponents of mergers say they lead to fewer jobs, less competition and higher prices. But analysts on Monday said that a potential Dish-Sprint merger may pose a greater challenge to ATT and Verizon, which dominate the wireless industry and charge higher prices for their phone plans.

As the No. 3 cellphone service provider, with 56 million subscribers nationwide, Sprint Nextel has struggled to catch up with larger rivals. It is expected to face even more competition as the parent company of T-Mobile USA, Deutsche Telekom, moves closer to a multibillion-dollar agreement to buy MetroPCS.

Dish Network said it would finance the cash component of the takeover through a combination of $17.3 billion in cash and debt financing.

Sprint said in a statement that it would look at Dish’s proposal, but declined to comment further on its plans. “Sprint Nextel today confirmed it has received an unsolicited proposal from Dish Network to acquire the company,” said Roni Singleton, a Sprint spokeswoman. “The company said that its board of directors will evaluate this proposal carefully and consistent with its fiduciary and legal duties. The company does not plan to comment further until the appropriate time.”

Mr. Ergen said his company would be as a better fit for Sprint than SoftBank because it would bring greater benefits to consumers. Fourteen million Dish Network subscribers would get improved services on their cellphones, and shareholders would own 32 percent of the combined company, whereas Softbank’s merger is essentially a cash infusion to strengthen Sprint.

Charles W. Ergen, Dish Network's chairman, said a merger with Sprint would benefit consumers by bundling services.Paul Sakuma/Associated PressCharles W. Ergen, Dish Network’s chairman, said a merger with Sprint would benefit consumers by bundling services.

“Sprint doesn’t change overnight because of SoftBank — it’s still Sprint,” he said. “Sprint transforms overnight with Dish.”

Susan P. Crawford, a law professor at Cardozo School of Law who served as special assistant to President Obama for science, technology and innovation policy, said there were pros and cons to a merger with Dish Networks. A combination with Dish Networks would pose more of a threat to ATT and Verizon, which account for two-thirds of American wireless subscribers, than a partnership with SoftBank, she said.

But it would also weaken T-Mobile USA, the No. 4 carrier, which has been offering cheaper phone plans to consumers, like its latest contract-free phone plans.

“Right now, we have two giants and two also-rans, and now you’re getting potentially three giants dividing up the American marketplace, with T-Mobile lagging far behind,” she said of the potential Dish-Sprint merger.

It is unclear whether a Dish takeover would change much about Sprint’s wireless service. Chetan Sharma, an independent telecom analyst who is a consultant for carriers, said that the only obvious change for consumers would be at a marketing level, not a technology level. While the bills may be consolidated, it would not be easy to share the benefits of a high-speed Internet connection at home with wireless networks that connect to a phone outside, he said.

Mr. Sharma said that a Sprint merger with SoftBank would most likely be better for consumers than one with Dish. The two carriers combined would have more buying power to negotiate with manufacturers like Apple or Samsung to buy large quantities of phones at lower prices.

Because the phones would be cheaper for Sprint, the carrier could charge customers less for access its network to make up for the costs of the phones, he said.

Amid the fight for Sprint is a tug of war for Clearwire, another wireless operator of which Sprint is the majority owner. Sprint has signaled interest in taking over the company entirely with the cash infusion from SoftBank, but Dish in January made an unsolicited bid of $2.2 billion for a portion of the company.

And on the heels of Monday’s news, Verizon offered $1.5 billion to buy spectrum from Clearwire, according to a person briefed on the company’s plans, who was not authorized to speak publicly because the plans were not yet official.

If Dish Networks succeeded in a takeover of Sprint, it would be in a position to acquire Clearwire more quickly than Sprint/SoftBank, because a foreign company that tries to buy more than 25 percent of a telecom company must undergo regulatory review.

Barclays is advising Dish Network on its proposed bid. Deutsche Bank, the Raine Group and Mizuho Securities are advising SoftBank. Citigroup, Rothschild and UBS are advising Sprint Nextel.


This post has been revised to reflect the following correction:

Correction: April 15, 2013

A previous version of this article misspelled the college where Susan P. Crawford, a law professor, teaches. It is the Cardozo Law School, not Cardoza.

Article source: http://dealbook.nytimes.com/2013/04/15/dish-network-makes-25-5-billion-bid-for-sprint-nextel/?partner=rss&emc=rss

DealBook: Dish Network Makes $25.5 Billion Bid for Sprint Nextel

7:41 a.m. | Updated

The pay-TV operator Dish Network said on Monday that it had submitted a $25.5 billion bid for Sprint Nextel.

The move is an attempt to scupper the planned takeover of Sprint Nextel by the Japanese telecommunications company SoftBank, which agreed in October to acquire a 70 percent stake in the American cellphone operator in a complex deal worth about $20 billion.

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Dish Network thinks it can do better. Under the terms of its proposed bid, Dish Network said it was offering a cash-and-stock deal worth about 13 percent more than SoftBank’s bid.

Dish Network values its offer at $7 a share, including $4.76 in cash and the remainder in its shares.The offer is 12.5 percent above Sprint Nextel’s closing share price on Friday.

“The Dish proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal,” said Charles W. Ergen, Dish Network’s chairman.

Mr. Ergen said a “Dish/Sprint merger will create the only company that can offer customers a convenient, fully integrated, nationwide bundle of in- and out-of-home video, broadband and voice services.”

Sprint Nextel

The bid is the latest for the telecommunications industry, as many of the largest companies around the world look to expand through acquisitions.

As part of its offer, Dish Network said it would be able to combine its own existing broadband and TV offerings with Sprint Nextel’s cellphone operations. The proposed takeover would allow the newly united company to compete with rivals like Verizon that are moving into new areas in search of revenue.

As the No. 3 cellphone service provider, with 56 million subscribers nationwide, Sprint Nextel has struggled to catch up with larger rivals. It is expected to face even more competition as the parent company of T-Mobile USA moves closer to a multibillion-dollar agreement to buy MetroPCS.

Dish Network said it would finance the cash component of the takeover through a combination of $17.3 billion in cash and debt financing.

Barclays is advising Dish Network on its proposed bid. Deutsche Bank, the Raine Group and Mizuho Securities are advising SoftBank. Citigroup, Rothschild and UBS are advising Sprint Nextel.

Article source: http://dealbook.nytimes.com/2013/04/15/dish-network-makes-25-5-billion-bid-for-sprint-nextel/?partner=rss&emc=rss

DealBook: Deutsche Telekom Nears a Deal to Buy MetroPCS

A branch of T-Mobile USA in Manhattan. The network operator is a unit of the German telecom giant Deutsche Telekom.Ozier Muhammad/The New York TimesA branch of T-Mobile USA in Manhattan. The network operator is a unit of the German telecom giant Deutsche Telekom.

12:54 p.m. | Updated

Deutsche Telekom said on Tuesday that it was in talks to buy MetroPCS and merge it with its T-Mobile USA unit, as the German telecom giant seeks to bolster its flagging business in the United States.

Under the terms of the proposed transaction, Deutsche Telekom would own the majority of shares in the newly combined American network operator.

Deutsche Telekom warned that “significant issues” had yet to be resolved. But people briefed on the negotiations said that a deal could be announced as soon as Wednesday.

If completed, a deal would come nearly a year after T-Mobile’s proposed $39 billion sale to ATT collapsed amid fierce opposition from antitrust regulators. And it would help shore up the Deutsche Telekom subsidiary’s position as a lower-cost alternative to Verizon Wireless and ATT.

Shares in MetroPCS shot up nearly 18 percent on Tuesday, to $13.60, after Bloomberg News reported talks between the two sides. That valued MetroPCS at about $4.9 billion.

Representatives for Deutsche Telekom and MetroPCS declined to comment or were not immediately available for comment.

Deutsche Telekom has been keen for years to find a way to strengthen its American subsidiary, which has lost customers to bigger rivals that offer faster data services and, perhaps more importantly, the iPhone. With 33,168 customers T-Mobile trails its bigger competitors, which also include Sprint Nextel, by considerable margins. And it lost 205,000 subscribers in its second quarter this year, quadruple what it reported a year ago.

Adding MetroPCS would give T-Mobile 9.3 million customers, though their phones operate on a different network technology.

Based in Richardson, Tex., MetroPCS has long been seen as a target for consolidation in the cellphone service industry. The company’s deal to sell itself to Sprint for stock and cash collapsed this year after the bigger network operator’s board vetoed the proposed transaction.

MetroPCS and another low-cost service provider, Leap Wireless, have considered merging several times over recent years, though those talks broke down repeatedly over price.

Article source: http://dealbook.nytimes.com/2012/10/02/deutsche-telekom-said-to-be-near-a-deal-to-buy-metropcs/?partner=rss&emc=rss

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