The special committee of the board of directors of Sprint Nextel Corporation (NYSE:S) gave DISH Network Corp (NASDAQ:DISH) a deadline to submit its best and final offer for the company as of June 18.

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Merger talks between Sprint Nextel Corporation (NYSE:S) and DISH Network Corp (NASDAQ:DISH) failed due to several disagreements including a demand from the telecommunications company for a $3 billion reverse-breakup fee from the satellite TV company, according to a report from Serena Saitto and Jeffrey McCracken of Bloomberg, citing sources familiar with the situation.

According to people familiar with merger talks between the two companies, Dish did not agree to the $3 billion and offered a $1 billion reverse break-up fee. Sources asked Bloomberg not to disclose their identity because the discussions were private.

Sprint Nextel Corporation (NYSE:S) announced on Monday that its board of directors and special committee concluded unanimously that the proposal of DISH Network Corp (NASDAQ:DISH) is unlikely to lead to a “superior offer” under the merger agreement.

“We have expended substantial time and energy engaging with Dish over the past nine weeks, including an extensive due diligence process, but these efforts did not lead in the Special Committee’s view to a proposal that was reasonably likely to lead to a proposal superior to SoftBank Corp (OTCMKTS:SFTBF) (TYO:9984)’s,” said Larry Glasscock, chairman of the special committee of Sprint.

SoftBank Corp (OTCMKTS:SFTBF) (TYO:9984) increased its proposal by 7.5 percent to $21.6 billion. The board of directors of Sprint Nextel Corporation (NYSE:S) approved its bid and recommended an amended merger agreement to the shareholders of the company.

Requirements for Sprint Under New Merger

Under the new merger agreement, Sprint is required to adopt a shareholder rights plan or poison pill, and to increase the non-refundable fiduciary termination fee payable by Sprint to SoftBank in certain circumstances from $600 million to $800 million.

The Japanese firm agreed to increase the breakup fee of $600 million if the agreement fails. The companies expect to complete the transaction early in July. SoftBank Corp (OTCMKTS:SFTBF) (TYO:9984) want to acquire Sprint to expand its business operations in North America.

Eric Gordon, a business and law professor at University of Michigan commented that Sprint Nextel Corporation (NYSE:S) demonstrated a favoritism because it demanded a higher breakup fee from DISH Network Corp (NASDAQ:DISH).

Gordon said, “The Sprint board wants a reverse-breakup fee from Dish that is five times what it got from SoftBank Corp (OTCMKTS:SFTBF) (TYO:9984). That tells you something about whom the Sprint board likes and doesn’t like.”