Softbank Corp. (TYO:9984) (PINK:SFTBF) increased its bid for Sprint Nextel Corporation (NYSE:S) to $21.6 billion earlier this month, and today we learn that the shareholder advisory firm Egan-Jones Ratings Co. is now in favor of that increased bid. Egan-Jones had previously opposed the Japanese telecom company’s offer.
What Changed Egan-Jones' Mind About Softbank?
Bloomberg’s Scott Moritz reports that Egan-Jones sent a report to Sprint Nextel Corporation (NYSE:S) explaining its new view on the deal. The advisory firm said it now approves of the deal because of Softbank Corp. (TYO:9984) (PINK:SFTBF)’s decision to increase the amount that will be paid out to shareholders. Under the terms of the new deal, shareholders would receive $7.48 per share of Sprint Nextel stock, compared with the $6.30 per share offer that was made earlier.
The firm said the other big reason it changed its view on the deal was because Sprint Nextel Corporation (NYSE:S)’s board believes Softbank will be able to improve its operations.
The Sprint – Softbank – DISH – Clearwire Saga
Softbank Corp. (TYO:9984) (PINK:SFTBF) raised its bid for Sprint Nextel from its prior offer of $20.1 billion in order to counter the unsolicited bid the company had received from DISH Network Corp (NASDAQ:DISH). Sprint Nextel Corporation (NYSE:S) had said that the offer from DISH Network Corp (NASDAQ:DISH) wasn’t actionable, so it told the company that it had until June 18 to submit its best and final offer.
Even if DISH Network doesn’t succeed in its bid for Sprint, it appears as if it might prevail in its attempts to acquire Clearwire Corporation. Clearwire’s board advised shareholders this week to opt for DISH’s bid over Sprint’s bid. It then dumped its merger plan with Sprint.
As far as the Sprint – Softbank deal goes, analysts at one firm are questioning whether Softbank’s deal is really a good idea for Sprint Nextel. Trefis said this week that $3 billion of the increased payout for shareholders will come from Sprint’s coffers, which means the company will have less cash to use as it builds out its LTE network and Network Vision Plan.