Softbank Sweetens Sprint Deal to Ward off Dish Network

by Matt Klassen on June 12, 2013

In a flurry of activity over the past 48 hours or so, the ongoing Sprint acquisition saga has seen Dish Network consider tabling a strong counter offer, Softbank sweeten its own deal, and the impending shareholder vote originally scheduled for today that could have ended it all now delayed for yet another two weeks.

The week began with the doomsday clock ticking on Dish Network’s chances to acquire America’s third largest mobile carrier, the satellite television provider pouring over Sprint’s books in an effort to determine whether to table a counter offer before the scheduled vote on Wednesday, a vote that many assumed would see the Softbank offer approved.

Then yesterday, in an effort to ward off Dish Network’s advances, Softbank went on the offensive, increasing its own bid by 7.5%–to $21.6 billion–and sweetening the pot for shareholders by offering more money up front. In response, the impending shareholder vote has been delayed for two weeks as shareholders ponder the new deal, now giving Dish Network the time it needs to table its ‘best and final’ offer.

On Monday it was clear that Dish Network wasn’t ready to give up on Sprint yet, despite the fact that Softbank’s proposed acquisition of the country’s third largest carrier had been approved by all necessary regulatory channels and that Sprint’s largest investors backed the Softbank deal. Dish Network representatives were pouring over Sprint’s books ahead of the today’s scheduled shareholder vote, trying to determine the company’s value and if a strong counter proposal for feasible…or even advisable.

But as mentioned, Softbank was not willing to sit on its laurels waiting to see what Dish Network would offer and how Sprint’s shareholders would respond, sweetening its own deal to ward off its rival’s potentially strong advances. Under the terms of the new deal, Softbank has agreed to give Sprint shareholders an extra $4.5 billion in cash, and to pay $7.65 per share, up from the previous offer of $7.30. The increased offer would give Softbank a 78% stake in the company, compared to its previously offered 70%.

As a result, the Japanese company will have less money to invest in Sprint, a huge selling point to some investors when Softbank made its initial bid, as the cash infusion is desperately needed for Sprint to catch rivals AT&T and Verizon in the American wireless market.

“The amended agreement allows Sprint shareholders to receive substantial cash and to begin to participate in Softbank upside on an expedited and low-risk basis,” said Larry Glasscock, chairman of Sprint’s special committee evaluating the bids. “We believe this preserves the timing and closing certainty of the original Softbank transaction.”

So what does this mean for Dish Network? While Dish Network has been informed by Sprint that its current bid is, “not reasonably likely to lead to a superior offer,” by pushing the shareholder vote back two weeks Dish Network has been granted some reprieve from the doomsday clock, with Sprint stating the satellite TV provider now has one week to deliver its, “best and final” for consideration, lest it be left out in the cold.

In the end, despite the reprieve it seems unlikely Dish Network will be able to offer something substantially better than Softbank, as what Sprint needs is both value for shareholders and a cash infusion for continued growth, and unless Dish is able to provider both, Softbank remains the best option going forward.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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