Toward the end of last year, Sprint got some good news as the Japanese company SoftBank began the process of buying the Now Network. The merger has been up and down, with some shareholders trying to hold out for more money, but for the most part everything seemed on track to create a more powerful and competitive Sprint. In fact, many of the regulatory hurdles have been already worked out, although there are some complicated aspects of the merger because Sprint themselves are in a battle to buyout ClearWire. However, a new bit of news today complicates things even further.
DISH Network, the floundering satellite TV provider just entered a counter offer to buy Sprint outright that is a larger bid than SoftBank's. Here's a quote with the details,
As you can see, the deal offered by DISH is a good one. It will be hard for investors to ignore, and, at the very least, will slow down the merger with SoftBank. If Sprint and its shareholders decide to entertain this offer seriously the question remains, "will SoftBank be willing to increase their offer to finish the deal?"Dish Network Corp, the No. 2 U.S. satellite television provider, offered to buy Sprint Nextel Corp for $25.5 billion in cash and stock, a move that could thwart the proposed acquisition of Sprint by Japan's SoftBank Corp.
Dish's bid is the latest development in a shakeup of the U.S. wireless business, which is undergoing a wave of consolidation. Dish was already in the midst of an unsolicited offer for Clearwire Corp, the wireless company majority-owned by Sprint.
It was also the boldest step yet by Dish Chairman Charlie Ergen, who has bought billions of dollars worth of wireless spectrum in the last few years and has been seeking some sort of deal to make use of the airwaves.
Dish said on Monday it would pay $4.76 per share in cash and about 0.05953 shares in Dish stock for each Sprint share. The offer, which works out to $7.00 per share, represents a premium of roughly 12 percent to Sprint's close on Friday.
Dish claimed its offer represented a premium of roughly 13 percent to SoftBank's existing bid. Sprint shareholders would own 32 percent of the combined company.
"The offer from Dish appears credible since it has the financing lined up and can justify a higher price than SoftBank's offer because of the synergies with its existing operations in the U.S.," said Nick Brown, a telecommunications analyst with Espirito Santo investment bank.
Sprint, the No. 3 U.S. mobile services provider, agreed in October to sell 70 percent of its shares to SoftBank for $20 billion. No date has been set yet for a vote on that deal.
It's hard to say which would have a better outcome in the future. On the one hand, if DISH did win the bid, that would mean keeping the ownership of Sprint in the United States, and it could help bolster DISH network to become a better digital wireless competitor. On the other hand, SoftBank is already a powerful and profitable company, and could offer beter future investment potential to help grow Sprint and make them more competitive with the other three big US carriers. Both options seem to have pluses and minuses. Which do you think would be the better option?