Dish enters battle to acquire Sprint with $25.5 billion bid
15 April 2013 | Kavit Majithia
Satellite TV provider Dish Network has made a shock $25.5 billion bid for Sprint Nextel in an effort to trump Softbank's proposed majority stake acquisition of the US's third largest carrier.
Dish, which has been also battling to acquire both MetroPCS and Clearwire in recent months, has made the bid to take full ownership of the third largest US carrier, and is offering to pay $4.67 per share in cash and approximately $2.24 per share in Dish stock, based on Friday’s trading price.
Japan-based Softbank agreed terms to acquire a 70% stake in Sprint for $20.1 billion last year, and Dish chairman Charles Ergen has claimed its offer “is much more compelling than the Softbank transaction”.
There have been numerous rumours in the market regarding Ergen’s attempts to gain access to the wireless industry, and this latest bid serves as the entrepreneur’s most audacious move yet.
A tie-up with Sprint will seemingly allow Dish, which has amassed spectrum and won approval from regulators to offer mobile services, access to high-speed internet and voice services through one bundled package.
Ergen said “Sprint is now in play,” in a statement, and combining the companies would prove a huge coup for the satellite provider, considering Sprint took $35.3 billion in revenue last year, compared with Dish’s $14.3 billion.
A combined entity would carry approximately $36 billion in debt, and Dish has indicated it will borrow to complete the deal.
Dish’s bid to acquire Clearwire saw it challenge Sprint for ownership the company, but it failed to make progress.
If Dish is successful in its bid for Sprint, it will be forced to pay a $600 million breakup fee to Softbank, of which Ergen has said he will be willing to pay.
Sprint’s future now rests in the hands of the company’s shareholders, which must assess which bid will prove superior.
Softbank does now have the opportunity to increase its bid, but both parties have so far declined to comment.