Sprint forms team to consider rival bids
New committee of board members to consider whether Dish Network's takeover offer is superior to Softbank's
Published: 23 April, 2013
Sprint has formed a 'special committee' to consider Dish Network's takeover bid, amid speculation that Softbank, whose offer for 70% of the cellco has already been accepted, will not raise its price.
The committee consists of several Sprint board members, chaired by Larry Glasscock, and indicates that the operator is at least taking the new offer seriously. It needs to decide whether the pay-TV giant's proposition is superior to that of the Japanese cellco.
The former is for 100% ownership and brings more cash, which would be welcome to accelerate Sprint's LTE roll-out, and it would also introduce the potential to add video and quad play services to improve competitiveness with Verizon and AT&T. The combined spectrum holdings would be a significant advantage, but the new entity would have a far higher debt mountain than the Softbank-Sprint partnership.
Softbank, if it does not up its bid, would still promise significant expertise in one of the world's most advanced mobile broadband markets and the chance for Sprint to take part in the Japanese company's influential industry alliances, which bring benefits such as roaming and common handset procurement (especially in TD-LTE, where Softbank has a similar network to that of Sprint's Clearwire venture). Clearwire's plentiful unpaired 2.5GHz spectrum, long undervalued by Sprint, is of key interest to both bidders and Dish had previously mounted a bid for a majority stake in the WiMAX-turned-LTE provider, in opposition to Sprint's own offer for full control.
Softbank's deal is worth $20.1bn - $12.1bn to acquire 70% of Sprint's shares, the rest to invest in the cellco's growth, particularly its Network Vision program. Dish's bid offers $25.5bn for full control.
Softbank insists its deal is superior and it says it is confident will still be able "to consummate the transaction on July 1, 2013" as planned. However, some analysts think this will only happen if the cellco ups its stakes. According to a Bloomberg report, though, Softbank is not likely to raise its offer. Citing an unnamed executive at the Japanese carrier, the news service said the proposal will not chance and Softbank will concentrate on persuading investors and board members of the"superior short and long term benefits" compared with Dish's "highly conditional preliminary proposal".