When Japanese mobile network Softbank laid a $20 billion bid down on the table for Sprint Nextel in October last year, it probably didn’t expect a whole lot of competition when trying to acquire the struggling operator. However, although it has taken almost six months, another possible buyer has emerged – Dish Network.
The satellite TV company has trumped Softbank’s bid with a total figure of $25.5 billion, a figure chairman Charles Ergen called, “More compelling than the Softbank transaction.” According to the Wall Street Journal, Dish will pay $7 per share in the proposed merger, split into $4.76 in cash and $2.24 in stock for each one. Ergen would become Sprint’s largest shareholder and control of the company would move to Dish.
Dish’s offer is unsolicited and comes soon after a stalled attempt to buy Clearwire, which itself is partially owned by Sprint. Dish is eager to make a move into mobile, having already gained approval from industry regulators to do so, and purchasing a network avoids the particularly expensive alternative route of building its own. In a buzzword-filled statement, Ergen told the Financial Times shareholders would be getting a better deal with Dish, and by combining forces it could provide, “A significantly-enhanced strategic position and substantial synergies that are not attainable through the pending Softbank proposal.”
A key difference between the two offers is that Dish will absorb Sprint, while Softbank intends to keep it as a standalone company. Softbank is also the larger of the two firms, and has at least twice the existing subscriber base, albeit in Japan. It’s now down to Sprint’s board of directors to decide if they want to entertain an official bid from Dish, and if so, Softbank could take the decision to increase its bid. Dish has published details of its offer on its website, but Sprint and Softbank have yet to respond.
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