DISH Network Outbids SoftBank with $25.5 Billion Offer to Buy Sprint

[dgstorm]

Toward the end of last year, Sprint got some good news as the Japanese company SoftBank began the process of buying the Now Network. The merger has been up and down, with some shareholders trying to hold out for more money, but for the most part everything seemed on track to create a more powerful and competitive Sprint. In fact, many of the regulatory hurdles have been already worked out, although there are some complicated aspects of the merger because Sprint themselves are in a battle to buyout ClearWire. However, a new bit of news today complicates things even further.

DISH Network, the floundering satellite TV provider just entered a counter offer to buy Sprint outright that is a larger bid than SoftBank's. Here's a quote with the details,

Dish Network Corp, the No. 2 U.S. satellite television provider, offered to buy Sprint Nextel Corp for $25.5 billion in cash and stock, a move that could thwart the proposed acquisition of Sprint by Japan's SoftBank Corp.

Dish's bid is the latest development in a shakeup of the U.S. wireless business, which is undergoing a wave of consolidation. Dish was already in the midst of an unsolicited offer for Clearwire Corp, the wireless company majority-owned by Sprint.

It was also the boldest step yet by Dish Chairman Charlie Ergen, who has bought billions of dollars worth of wireless spectrum in the last few years and has been seeking some sort of deal to make use of the airwaves.

Dish said on Monday it would pay $4.76 per share in cash and about 0.05953 shares in Dish stock for each Sprint share. The offer, which works out to $7.00 per share, represents a premium of roughly 12 percent to Sprint's close on Friday.

Dish claimed its offer represented a premium of roughly 13 percent to SoftBank's existing bid. Sprint shareholders would own 32 percent of the combined company.

"The offer from Dish appears credible since it has the financing lined up and can justify a higher price than SoftBank's offer because of the synergies with its existing operations in the U.S.," said Nick Brown, a telecommunications analyst with Espirito Santo investment bank.

Sprint, the No. 3 U.S. mobile services provider, agreed in October to sell 70 percent of its shares to SoftBank for $20 billion. No date has been set yet for a vote on that deal.

As you can see, the deal offered by DISH is a good one. It will be hard for investors to ignore, and, at the very least, will slow down the merger with SoftBank. If Sprint and its shareholders decide to entertain this offer seriously the question remains, "will SoftBank be willing to increase their offer to finish the deal?"

It's hard to say which would have a better outcome in the future. On the one hand, if DISH did win the bid, that would mean keeping the ownership of Sprint in the United States, and it could help bolster DISH network to become a better digital wireless competitor. On the other hand, SoftBank is already a powerful and profitable company, and could offer beter future investment potential to help grow Sprint and make them more competitive with the other three big US carriers. Both options seem to have pluses and minuses. Which do you think would be the better option?

Source: Yahoo!

 

[doomgazer]

Assuming Charlie has any major say in the new company, I can see a lot more litigation and a lot less progress than we might otherwise see with a different company. Charlie is notorious for loving a good court battle, resulting in network blackouts on Dish fairly regularly during contract disputes.

I do however, like the idea of the company remaining wholly owned by US based investors.

 

[liftedplane]

I do however, like the idea of the company remaining wholly owned by US based investors.

why? would it not help to have a fresh outlook from another country on how to run a cellular phone company? the Japanese do seem to have it a bit better than us.

 

[kodiak799]

Where in heck does DISH get the money to do this deal?!?

Two struggling companies? I'm not sure how combining them is going to help. Maybe I'm just not seeing it, but I can't think of many synergies or capabilities to leverage.

 

[dgstorm]

I was wondering the same thing kodiak. I thought DISH was hurting. How did they get someone willing to lend them $20+ Billion?

 

[kodiak799]

I was wondering the same thing kodiak. I thought DISH was hurting. How did they get someone willing to lend them $20+ Billion?

They're market cap is only $16.7B! Although smaller companies HAVE bought out larger ones before...the offer is supposedly $17B in cash and $8B in stock. Not sure where they would get the cash, because I'd assume they are already pretty highly leveraged (but I haven't seen a financial statement).

Dish also expects the proposed combination will result in synergies and growth opportunities estimated at $37 billion in net present value. This includes an estimated $11 billion in cost savings, representing about $1.8 billion in annual run-rate cost synergies by the third year after closing. Dish intends to fund the $17.3 billion cash portion of the deal using $8.2 billion of balance sheet cash and additional debt financing.

^^^LOL at the bolded.

 

[Lucas5]

Doesn't Dish Network own some decent wireless spectrum? Whichever way this goes, I think that it's a good thing. I'd like to see the two small guys (tmobile and sprint) grow and give the other two big guys (verizon and att) some good competition.

 

[kodiak799]

Doesn't Dish Network own some decent wireless spectrum?

Excellent point. I'm maybe off-base with a lack of knowledge here.

One could imagine some bundled deals for cell/cable that are appealing. But, again, you're fighting for the scraps of marginally profitable customers.

 

[wvdroidman]

either way I see dish and directv trying to merge again to compete with the likes of Comcast and time warner. Somehow I think this transaction might play into their plans to merge.

 

[liftedplane]

either way I see dish and directv trying to merge again to compete with the likes of Comcast and time warner. Somehow I think this transaction might play into their plans to merge.

Wth for some reason Tapatalk is linking wvdroidman's post to a very old forum post

Either way I'd love to see a dish directv merger. Especially with the new hopper and genie DVR.

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