DISH Network Corp. (NASDAQ:DISH) is desperate to break into the mobile industry—so desperate in fact, that it made a rival unsolicited bid for Sprint Nextel Corporation (NYSE:S) on Monday. The saga continues, but will this kick off a bidding war between DISH and Softbank Corp. (TYO:9984) (PINK:SFTBF)?
Shares of Softbank Corp. (TYO:9984) (PINK:SFTBF) dropped as much as 10 percent today in the wake of DISH Network Corp. (NASDAQ:DISH)’s offer to buy Sprint Nextel out from under Softbank. The Financial Times reports that shareholders sold their Softbank shares not because the company may miss out on acquiring Sprint Nextel Corporation (NYSE:S), but because they believe the company’s founder and CEO Masayoshi Son will increase his bid for Sprint Nextel and put a squeeze on the company’s finances in the process.
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DISH Network has been making waves throughout the telecommunications industry for months. It tried to take Clearwire Corporation (NASDAQ:CLWR) away from Sprint Nextel earlier this year, but those hopes may have been dashed in March when Clearwire dipped into the pre-merger funds provided by Sprint Nextel Corporation (NASDAQ:S) for a second time.
DISH is also reportedly trying to make a deal with Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) for its subsidiary T-Mobile USA, which is currently involved in a proposed merger with MetroPCS Communications Inc (NYSE:PCS).
But even if Softbank Corp. (TYO:9984) (PINK:SFTBF) decides to let DISH Network have Sprint, it will still gain. The company receives a $600 million fee if the deal with Sprint Nextel falls through. In addition, Softbank set a forward exchange rate of 82 yen to the U.S. dollar when the original deal was offered six months ago.
As the value of the yen has plunged, the company could gain $2 billion if it cashes in the contracts. The company could also profit through the $3.1 billion convertible bond it bought from Sprint Nextel last year.
According to The Financial Times, a source said Softbank’s appeal to Sprint Nextel Corporation (NYSE:S) shareholders will focus on how vulnerable DISH Network’s cash-and-share offer is, although some analysts believe Softbank will need to sweeten the deal by $2 billion in order to meet the offer made by DISH.
If the deal between Softbank and Sprint Nextel does happen, it would be the largest foreign acquisition by a Japanese company.