Softbank Slams Dish Offer For Sprint Nextel

Updated on

Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) president and CEO today criticized the rival offer from DISH Network Corp (NASDAQ:DISH) for Sprint Nextel Corporation (NYSE:S). Masayoshi Son said that Dish’s unsolicited $25.5 billion offer is incomplete and illusory. Son dismissed the idea of raising his $20.1 billion bid for a 70% stake in Sprint Nextel Corporation, and said his plans would provide Sprint shareholders better value.

SoftBank logo

DISH Network Corp (NASDAQ:DISH) wanted to combine its satellite TV business with Sprint Nextel Corporation (NYSE:S)’s wireless network to provide customers video services anywhere, anytime. Though Softbank Corp (OTCMKTS:SFTBF) (TYO:9984)’s bid values Sprint Nextel Corporation at $6.22 per share, Masayoshi Son calculated that his offer is actually $7.65 or 21 percent higher than DISH Network Corp (NASDAQ:DISH)’s bid. Son’s calculations factored in breakup fees, regulatory delays, transaction costs and synergy effects. Dish’s $25.5 billion offer Sprint Nextel Corporation (NYSE:S) at $7 per share.

In fact, Mr. Son pointed out 11 ways that show why his offer is superior. He said DISH Network Corp (NASDAQ:DISH) plans to partially fund the deal by loading Sprint Nextel Corporation (NYSE:S)’s balance sheet with debts. And the combined firm will have a gross debt in excess of $50 billion. That’s an “insane” figure, said Mr. Son. Dish’s merger will take over a year to complete, compared to Softbank Corp (OTCMKTS:SFTBF) (TYO:9984)’s closing target of July 1. Taking a dig at DISH Network Corp (NASDAQ:DISH) chairman Charlie Ergen, Son added that DISH Network Corp has absolutely no industry experience and does not have the level of relationships that Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) has built. SoftBank has developed strong relationships with Intel Corp. and Google Inc., while Dish is involved in several “ugly” litigation battles.

Son’s comments come after Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) reported a record $7.59 billion profit in the last financial year ending March 31. Son estimates profits to rise this year to $8-$9 billion. Earlier, DISH Network Corp (NASDAQ:DISH) said that it can easily receive regulatory approvals as it’s a domestic company. But Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) CEO said that U.S. regulatory officials have indicated that the process is going very smoothly.

Sprint Nextel Corporation (NYSE:S) shareholders are set to vote on the proposed deal of Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) on June 12. SoftBank Corp may find it hard to win backing of institutional shareholders of Sprint Nextel Corporation (NYSE:S). Billionaire John Paulson, the fourth largest shareholder of Sprint, said he finds the DISH Network Corp (NASDAQ:DISH) offer compelling.

Sprint Nextel Corporation (NYSE:S) shares were up 0.28% to $7.14, DISH Network Corp (NASDAQ:DISH) shares were almost flat at $40.55 at 9:51 AM EDT.

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!