Softbank in talks to acquire a 70% stake in Sprint

Wireless provider Softbank is in talks with three Japanese banks to borrow $23 billion and finance a 70% stake in Sprint Nextel.

According to Reuters, Softbank has been looking to break into the US market for months in a bid to diverse away from its stagnating home market.

On news of the talks, Sprint’s market value jumped $2 billion to $17 billion, and both Softbank and Sprint confirmed discussions had been held.

Market analysts warned, however, any deal Softbank struck could leave the Japanese company with high levels of debt. Both Sprint and Softbank have a net debt of $15 billion and $10 billion respectively.

Softbank is owned by Masayoshi Son, Japan’s second richest man, and his strategy of risky acquisitions has meant the company is now worth $40 billion. The drive for Sprint has been led by Son’s belief that the company is undervalued, but a 70% investment in the US operator could be his riskiest yet.

The Yen’s strength against the dollar is also another reason for the deal, and if it goes through it is expected Sofbank will significantly shake up the US wireless market.

There are further rumours Softbank is also looking to acquire Sprint’s partner Clearwire, and given rumours that Sprint is also interested in acquiring MetroPCS, Softbank could have significant leverage in the competitive US market presently dominated by AT&T and Verizon.

The two step deal, if it went through, would be the biggest overseas acquisition made a Japanese firm.