 "SoftBank raises Sprint offer, wins key shareholder support")
Japanese mobile operator SoftBank Corp said it agreed to raise its offer for US wireless carrier Sprint Nextel Corp to $21.6 billion from $20.1 billion as it fights off a counter bid by Dish Network Corp.
SoftBank's sweetened offer won the backing of hedge fund Paulson & Co, Sprint's second-biggest shareholder, which had earlier supported the Dish bid. Paulson said it would vote all its shares in favour of SoftBank's improved offer. Sprint said it had ended talks with Dish, and it gave the company until June 18 to come back with its best and final bid. Under the new deal, SoftBank will buy shares from current Sprint shareholders at $7.65 each, up from the previous offer of $7.30.
The Japanese firm, led by billionaire founder Masayoshi Son, will end up with 78 per cent of Sprint, compared with 70 percent in its previous bid, the companies said in a statement on Tuesday. The deal includes $16.6 billion cash for Sprint shareholders, $3.1 billion of Sprint debt already bought by SoftBank, and a $1.9 billion direct investment in Sprint.
Sprint shares rose three per cent in premarket trading. Macquarie analyst Kevin Smithen said Sprint shareholders should "take the money and run".
"In the absence of a 'binding' and superior offer from Dish in the next week, we expect Sprint holders to accept the revised SoftBank offer," Smithen said in a research note, adding that "time is not on Sprint's side" because it needs to quickly reverse customer losses to improve its earnings.
Sprint shareholders were scheduled to vote on the previous SoftBank bid on June 12, but that meeting was put back to June 25 in light of the sweetened bid. SoftBank's offer is up against a bid worth $25.5 billion from US satellite TV provider Dish Network.
In a brief statement, Dish said it "will analyse the revised SoftBank bid as we consider our strategic options," adding it still believes Sprint has tremendous value.
A person familiar with Dish's thinking said the company was unlikely to be deterred by the new SoftBank bid. "They're moving the deckchairs around. It doesn't represent meaningful incremental value for Sprint shareholders," said the source, who asked not to be named. "SoftBank's revised offer is probably less than people would have expected them to come back with."
Charlie Ergen, Dish's billionaire chairman known for launching fierce takeover battles, said last month he could take on a bidding partner and even sell off non-core assets to pay down debt if a bidding war with SoftBank became too pricey.
Wait and see
A large Sprint shareholder opted to wait until Dish reacts before making any decisions. "SoftBank's bid is now superior to Dish's, but we have to see how it plays out. We have two very clever guys who want the same asset," said the source, who did not want to speak publicly on the matter.
SoftBank's Son said the new offer "delivers more upfront cash to Sprint stockholders while still achieving our goal of creating a well-capitalised Sprint that is better positioned to bring meaningful competition to the US market".
Son, an unusually aggressive risk-taker in a cautious Japanese corporate culture, wants Sprint as a springboard into the US, where the two most dominant players are Verizon Communications Inc and AT&T Inc. Son, who brought the iPhone to Japan, is betting US growth can offer relief from cut-throat competition in Japan's saturated mobile market.
Dish deadline
Sprint said its committee evaluating Dish's bid unanimously determined it "is not reasonably likely to lead to a 'superior offer'". Dish has carried out due diligence, but the committee said Dish had failed to put forward a offer that Sprint could act on.
"As a consequence of the lack of progress with Dish and the improved terms from SoftBank, the special committee ended its discussions with Dish," Sprint said.
SoftBank said it will use proceeds from recent bond sales as well as a bridge loan already signed with four banks last year to finance the deal.
In Tokyo, SoftBank shares initially climbed 1.8 per cent after the announcement, following the previous day's 9.5 per cent jump, the stock's biggest one-day gain since October. The shares later retreated to trade 0.4 per cent lower, while the benchmark Nikkei average was down 0.9 per cent.
Sprint shares rose to $7.40 in premarket trading Tuesday after closing at $7.18 on the New York Stock Exchange on Monday.
SoftBank's sweetened offer won the backing of hedge fund Paulson & Co, Sprint's second-biggest shareholder, which had earlier supported the Dish bid. Paulson said it would vote all its shares in favour of SoftBank's improved offer. Sprint said it had ended talks with Dish, and it gave the company until June 18 to come back with its best and final bid. Under the new deal, SoftBank will buy shares from current Sprint shareholders at $7.65 each, up from the previous offer of $7.30.
The Japanese firm, led by billionaire founder Masayoshi Son, will end up with 78 per cent of Sprint, compared with 70 percent in its previous bid, the companies said in a statement on Tuesday. The deal includes $16.6 billion cash for Sprint shareholders, $3.1 billion of Sprint debt already bought by SoftBank, and a $1.9 billion direct investment in Sprint.
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It would be the biggest-ever overseas acquisition by a Japanese company.
Sprint shares rose three per cent in premarket trading. Macquarie analyst Kevin Smithen said Sprint shareholders should "take the money and run".
"In the absence of a 'binding' and superior offer from Dish in the next week, we expect Sprint holders to accept the revised SoftBank offer," Smithen said in a research note, adding that "time is not on Sprint's side" because it needs to quickly reverse customer losses to improve its earnings.
Sprint shareholders were scheduled to vote on the previous SoftBank bid on June 12, but that meeting was put back to June 25 in light of the sweetened bid. SoftBank's offer is up against a bid worth $25.5 billion from US satellite TV provider Dish Network.
In a brief statement, Dish said it "will analyse the revised SoftBank bid as we consider our strategic options," adding it still believes Sprint has tremendous value.
A person familiar with Dish's thinking said the company was unlikely to be deterred by the new SoftBank bid. "They're moving the deckchairs around. It doesn't represent meaningful incremental value for Sprint shareholders," said the source, who asked not to be named. "SoftBank's revised offer is probably less than people would have expected them to come back with."
Charlie Ergen, Dish's billionaire chairman known for launching fierce takeover battles, said last month he could take on a bidding partner and even sell off non-core assets to pay down debt if a bidding war with SoftBank became too pricey.
Wait and see
A large Sprint shareholder opted to wait until Dish reacts before making any decisions. "SoftBank's bid is now superior to Dish's, but we have to see how it plays out. We have two very clever guys who want the same asset," said the source, who did not want to speak publicly on the matter.
SoftBank's Son said the new offer "delivers more upfront cash to Sprint stockholders while still achieving our goal of creating a well-capitalised Sprint that is better positioned to bring meaningful competition to the US market".
Son, an unusually aggressive risk-taker in a cautious Japanese corporate culture, wants Sprint as a springboard into the US, where the two most dominant players are Verizon Communications Inc and AT&T Inc. Son, who brought the iPhone to Japan, is betting US growth can offer relief from cut-throat competition in Japan's saturated mobile market.
Dish deadline
Sprint said its committee evaluating Dish's bid unanimously determined it "is not reasonably likely to lead to a 'superior offer'". Dish has carried out due diligence, but the committee said Dish had failed to put forward a offer that Sprint could act on.
"As a consequence of the lack of progress with Dish and the improved terms from SoftBank, the special committee ended its discussions with Dish," Sprint said.
SoftBank said it will use proceeds from recent bond sales as well as a bridge loan already signed with four banks last year to finance the deal.
In Tokyo, SoftBank shares initially climbed 1.8 per cent after the announcement, following the previous day's 9.5 per cent jump, the stock's biggest one-day gain since October. The shares later retreated to trade 0.4 per cent lower, while the benchmark Nikkei average was down 0.9 per cent.
Sprint shares rose to $7.40 in premarket trading Tuesday after closing at $7.18 on the New York Stock Exchange on Monday.