Sprint Shareholders Approve SoftBank Acquisition, Scuttle DISH Bid
June 25, 2013 5:21 PM
Approval sets the stage for a fight over ClearWire
DISH Network Corp. (
) founder and CEO Charlie Ergen hates losing. But it appears that he has lost in
his acquisition bid for Sprint
Nextel Corp. (
), with approximately 80 percent of shareholders (with 98 percent voting) approving of
a rival bid from Japanese carrier Softbank
I. SoftBank Wins
The SoftBank bid on the surface looked slightly less favorable, offering a bit less cash, less stock, and a lower final ownership stake.
But shareholders -- and Sprint's management -- took issue with the fine print that Mr. Ergen tends to load his bids with, and felt SoftBank's deep experience as a successful mobile operator made it a better fit (versus DISH who could offer service bundling opportunities). Further, Sprint shareholders and management voiced skepticism about DISH's ability to raise the amount of cash it promised for the bid.
Charlie Ergen (Dish/Echostar) and Masayoshi Son (Softbank) both serve as joint chairman and CEOs of their firms. Both have a penchant for driving a hard deal. And both hate to lose.
[Image Source: Sawyer Speaks (left); Bloomberg (right)]
Under the SoftBank deal, shareholders will get $16.64B USD in cash, or roughly $7.65 USD per share. The share pool will then swell, so that SoftBank owns 78 percent of Sprint and existing shares constitute 22 percent of the pool. The deal should wrap up by July, though it could be extended, if necessary.
The acquisition must now past U.S. regulatory approval. [Image Source: Lisa Poole/AP]
The deal will next need to score regulatory approvals from the
U.S. Federal Communications Commission
U.S. Department of Justice
(DOJ) (the latter of which gives a silent blessing by declining to sue to block major mergers).
II. Will Ergen Looks to Drive Clearwire Into Bankruptcy to Punish Sprint?
The big question is how Mr. Ergen will take this news, and whether he'll try to punish Sprint for its rejection.
At stake is Sprint's partially-owned subsidiary Clearwire Corp. (
). Currently Sprint controls about 50 percent of shares in the wireless broadband company, while minority shareholders hold the rest.
Mr. Ergen has hoisted an attractive proposal for those minority shares, which is much sweeter than a bid by Sprint's, who is
bidding to fully own Clearwire
. Clearwire's board has endorsed the proposal, which will soon be put to a vote among minority shareholders.
But Sprint is
suing to block that acquisition
, saying it violates the company's governing documents, which require Sprint to approve of such deals. Sprint contends that it has a strong interest in the success of Clearwire, having
poured billions in investments
into it. It accuses Mr. Ergen of offering an acquisition contract that triggers debt-based cash payouts that could let him turn a profit if Clearwire goes bankrupt.
Under Mr. Ergen's offer, he could gain if Clearwire goes bankrupt. [Image Source: TNW]
Thus the worst-case scenario (according to Sprint) is for Mr. Ergen to win his bid (and against Sprint's challenge), and then opt to drive Clearwire into bankruptcy, scoring both sweet retribution against the carrier who scorned him, plus cash. Such a scenario could constrain the finances of SoftBank, which would further benefit Mr. Ergen if he carries through on rumored plans to launch a fifth major U.S. carrier leveraging his
hoarded stockpile of spectrum
Sprint CEO Dan Hesse loves the SoftBank acquisition. [Image Source: Ellis Hamburger]
Still Sprint took an optimistic tone in
its press release
on the acquisition vote, with CEO Dan Hesse (who owns
almost 1 percent
of the company) remarks, "Today is a historic day for our company, and I want to thank our shareholders for approving this transformative merger agreement. The transaction with SoftBank should enhance Sprint’s long-term value and competitive position by creating a company with greater financial flexibility."
"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard
Sprint Chills to DISH, Sues Over Clearwire Offer
June 18, 2013, 10:20 AM
Report: DISH CEO Makes Aggressive $2B USD Bid for LightSquared's Spectrum
May 20, 2013, 10:25 PM
Dish Looks to Scoop SoftBank, Offers $25.2B USD for Sprint
April 15, 2013, 11:22 AM
Sprint Announces Clearwire Buyout at $2.97/Share
December 17, 2012, 9:00 AM
Softbank to Take 70 Percent Stake in Sprint for $20B
October 15, 2012, 7:32 AM
Apple Watch NikeLab Limited Edition unveiled.
April 22, 2017, 6:20 AM
What is the Apple’s iPhone 8 specifications and release date?
April 14, 2017, 5:43 AM
Xiaomi Mi Pad 3 tablet with Hexa –Core SoC, Android Marshmallow
April 6, 2017, 6:40 AM
Vivo launches V5 Plus IPL edition smartphone
April 4, 2017, 11:10 AM
Samsung S8 and S8 Plus: On Sale April 21 at Major Wireless Dealers
March 30, 2017, 7:35 AM
Are You in the Market for Earphones?
March 24, 2017, 7:35 AM
Most Popular Articles
Surface Pro 5 Rumors - New Release Date and Price
April 22, 2017, 6:45 AM
ASUS RT-AC5300 – Ultimate Game & 4K Streaming
April 18, 2017, 7:45 AM
Dell Inspiron 17 7000 – A Premium Laptop featuring 7th Gen Intel Core i7 in a 2-in-1 Frame.
April 19, 2017, 7:45 AM
Meet the Smartphone with four cameras - Alcatel Flashphone
April 5, 2017, 11:20 AM
Vivo V5 Plus – the Selfie Softlight is on You.
April 17, 2017, 7:05 AM
Latest Blog Posts
Samsung Galaxy S8 and S8 Plus – Lots of Glass that Breaks Easily
Apr 25, 2017, 7:20 AM
Samsung Galaxy S8 – Warning for Pet Owners
Apr 24, 2017, 5:59 AM
Sound Bars and the Costs?
Apr 23, 2017, 6:30 AM
Link your Brain to Your Computer – In Four Years…Maybe
Apr 22, 2017, 7:03 AM
Google Home can now identify users by their voice.
Apr 21, 2017, 7:15 AM
Amazon Lex – Now Available for Developers.
Apr 20, 2017, 6:58 AM
You can now use Instagram offline on your Android Smartphone
Apr 19, 2017, 8:00 AM
Now you can livestream to YouTube from your mobile device.
Apr 18, 2017, 8:05 AM
Google Home – Is It a Spy Device?
Apr 17, 2017, 7:30 AM
Apple added to self –driving test permit list
Apr 15, 2017, 6:21 AM
Project Scorpio – Coming on June 11
Apr 14, 2017, 6:20 AM
Looks Like Samsung Has Been Forgiven.
Apr 13, 2017, 6:50 AM
United Airlines - Blasted on China’s Social Network and the Stock Market
Apr 12, 2017, 6:50 AM
Amazon's Third-Party Sellers Hacked
Apr 11, 2017, 6:25 AM
Microsoft Surface Pro5 Details Revealed
Apr 9, 2017, 6:41 AM
Own An Android Phone? Then you could be hacked over Wi-FI
Apr 7, 2017, 6:47 AM
Apple confirms iOS 10.3 bug and its effect on iCloud Services
Apr 6, 2017, 6:30 AM
Apple Rolls Out New Version of Apple Music
Apr 5, 2017, 10:35 AM
Apple in the News
Apr 4, 2017, 9:03 AM
Apple iPhones Will Soon Feature Graphics Chips Designed BY Apple
Apr 3, 2017, 6:23 AM
AMD Ryzen Desktop Processors Performance
Apr 2, 2017, 6:30 AM
More Blog Posts
Copyright 2017 DailyTech LLC. -
Terms, Conditions & Privacy Information