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DISH’s Offer For Sprint Gains Backing From Omega, Paulson

DISH Network Corp (NASDAQ:DISH)’s unsolicited $25.5 billion offer to acquire Sprint Nextel Corporation (NYSE:S) has received a vote of confidence from Leon Cooperman of Omega Advisors Inc. and hedge fund billionaire John Paulson. That further diminishes the hope of Japanese telecom giant Softbank Corp (PINK:SFTBF) (TYO:9984), which agreed in October 2012 to acquire 70 percent stake in the U.S. wireless carrier.

DISH's Offer For Sprint Gains Backing From Omega, Paulson

Leon Cooperman-led Omega Advisors Inc., which owns 1.9 percent stake in Sprint Nextel Corp. (NYSE:S), said today that DISH Network Corp (NASDAQ:DISH)’s offer is superior to Softbank Corp (PINK:SFTBF) (TYO:9984)’s. The Japanese telecom giant has only proposed an investment in the Overland Park, Kansas-based company, while the proposal ofDISH Network Corp (NASDAQ:DISH) will benefit customers by combining Sprint Nextel Corporation (NYSE:S)’s wireless network with its own satellite TV services.

DISH Network Corp (NASDAQ:DISH) offer has already been endorsed by another hedge fund Paulson & Co., which owns 4.2 percent stake in Sprint Nextel Corporation John Paulson said yesterday that a merger with DISH Network Corp (NASDAQ:DISH) will give Sprint Nextel Corporation (NYSE:S) cost synergies, revenue synergies, valuable spectrum and 14 million new subscribers.

On Monday, the No.2 U.S. satellite TV company announced a $25.5 billion offer to acquire 70 percent stake in Sprint Nextel Corporation (NYSE:S), which topped Softbank Corp (PINK:SFTBF) (TYO:9984)’s $20.1 billion offer for the same stake. DISH Network Corp’s proposal valued Sprint Nextel Corporation (NYSE:S) at $7 per share, a 12.5 percent premium over its April 12 closing. Sprint shares have been trading above $7 since then, indicating that investors expect a bidding war. Sprint Nextel Corporation has about 56 million subscribers in the United States.

Shares of Softbank Corp (PINK:SFTBF) (TYO:9984) tumbled 9.3 percent after DISH Network Corp (NASDAQ:DISH) announced its offer, as investors worried that the bid may scuttle SoftBank Corp (TYO:9984) (PINK:SFTBF)’s offer. The Japanese firm was trying to expand in the United States as telecom markets in its home country have saturated.

Piper Jaffray said in a research report that it may not be the end of the story, as Softbank Corp (PINK:SFTBF) (TYO:9984) may increase its bid. Christopher Larsen of Piper Jaffray said that Softbank Corp (PINK:SFTBF) (TYO:9984) will need to infuse as much as $2 billion to match DISH Network Corp’s offer. Larsen believes that Sprint Nextel Corporation would be better off with DISH Network Corp (NASDAQ:DISH), as their merger will bring real revenue and cost synergies.

Sprint Nextel Corporation (NYSE:S) shares were up 0.56 percent to $7.24 at 10:27 AM EDT.