SoftBank Corp. (9984), defending its takeover bid for Sprint (S) Nextel Corp. against a counteroffer from Dish Network Corp. (DISH), told investors that its deal will bring about $3 billion in annual operating savings by 2017.
A SoftBank transaction will save more than $2 billion a year on average from 2014 to 2017, reaching a run rate of $3 billion annually after that, the Tokyo-based company said in a filing. The merged companies will also be able to cut Sprint’s capital spending by 32 percent to 36 percent, SoftBank said. President Masayoshi Son presented the numbers to Sprint investors in a meeting in New York, two people familiar with the matter said.
Sprint, the third-largest U.S. wireless carrier, is weighing a $25.5 billion bid from Dish, the nation’s second-largest satellite-TV provider. While the price tops SoftBank’s $20.1 billion offer, Dish has been less specific about how it will fund the transaction.
Sprint’s board is concerned about Dish’s ability to obtain the financing, as well as the debt that would be placed on the merged company, a person familiar with the deliberations said this week. Dish has estimated that it could produce $11 billion in cost savings as the two companies reduce overlap in marketing staff and other business units, though Sprint’s directors have questioned how those synergies would be produced, the person said.
SoftBank’s synergy information is based on nine months of diligence performed before it announced its deal with Sprint in October. Like Sprint, SoftBank is a wireless carrier, so the companies could pool their phone and network-equipment purchasing to buy and bulk.
Dish, meanwhile, aims to use Sprint to expand into the mobile-phone market -- part of Chairman Charlie Ergen’s plan to decrease his reliance on the slowing satellite-TV market.
SoftBank also is providing $8 billion in cash to Sprint, helping accelerate its turnaround plan. The U.S. carrier is angling to return to profitability after the $36 billion purchase of Nextel Communications Inc. in 2005 saddled the company with debt and led to tens of billions of dollars in losses.
Sprint shares rose 0.4 percent to $7.35 at the close in New York. They have climbed 30 percent this year, putting them above the price offered by SoftBank or Dish, suggesting that investors are expecting a bidding war.