Sprint, which has already agreed to a $20.1 billion proposal from SoftBank Corp. (9984), got a waiver from the Japanese company yesterday to provide non-public information to Dish, according to a statement. Sprint said its board hasn’t made a decision on Dish’s bid and continues to back SoftBank’s proposal, though it has the right to terminate the agreement for a superior offer.
SoftBank, which said today it plans to sell 400 billion yen ($3.9 billion) of bonds, is targeting Sprint as billionaire Masayoshi Son seeks U.S. expansion while Japan’s population ages and shrinks. Dish Chairman Charlie Ergen is pushing to break into the wireless-phone market, letting him offer a bundle of television, Internet and mobile-phone services.
“Sprint has done this because it can maintain fairness in the deal process and can have an explanation for its shareholders,” said Hideki Yasuda, an analyst at Ace Securities Co. in Tokyo The new debt issue will help “prepare for the worst scenario in which SoftBank has to raise its bid,” said Yasuda, who has the equivalent of a buy rating on SoftBank shares.
SoftBank, Japan’s third-largest carrier, will sell the five-year bonds to retail investors, the company said in a filing today with Japan’s Finance Ministry. The proceeds will be used to repay maturing debt and help fund the takeover, spokesman Takeaki Nukii said today.
SoftBank fell 3.8 percent to 5,850 yen at the close in Tokyo, while Japan’s benchmark Nikkei 225 Stock Average gained 0.1 percent. Overland Park, Kansas-based Sprint rose 1.4 percent to $7.39 at the close in New York, and shares of Englewood, Colorado-based Dish rose 3.2 percent to $39.93.
Sprint, the third-largest U.S. wireless carrier, agreed to a takeover in October by Tokyo-based SoftBank, which has its financing in place and offered to give the U.S. wireless carrier an $8 billion cash infusion as part of the deal. Dish stepped in with its counteroffer last month, seeking to expand into the mobile-phone business to offset a decline in satellite television.
“We look forward to engaging in full due diligence,” Ergen said in a statement. “We remain confident that this process will confirm the superiority of our proposal.”
Meanwhile, Sprint today increased its bid for full control of wireless-network partner Clearwire Corp. (CLWR) to $3.40 a share, up 14 percent from a previous bid of $2.97 a share. Dish had offered $3.30 a share. Clearwire, which was scheduled to vote on Sprint’s earlier offer today, delayed the decision until May 30.
SoftBank understands Sprint has an obligation to evaluate competing offers and granted the waiver so the U.S. carrier can complete the process without causing delays, the Japanese company said in its statement.
“We continue to believe that our agreed transaction, which we plan to close in approximately six weeks, creates substantially greater value and provides far greater certainty for Sprint shareholders,” SoftBank Holdings Inc. President Ron Fisher said.
Sprint has tentatively set June 12 as the date for shareholders to vote on the Japanese company’s bid. SoftBank plans to complete its offer under the announced terms on July 1 “or as soon as possible thereafter,” it said.
Dish is arranging the financing it would need to outbid SoftBank. It’s already raising about $2.6 billion in a bond offering managed by Barclays Plc, Jefferies Group LLC, Macquarie Group Ltd. and Royal Bank of Canada.
Dish is close to tapping the same banks for loans to help reach its goal of $9.3 billion in financing for the Sprint transaction, people familiar with the matter said May 15.
“There can be no assurance that the Dish proposal will ultimately lead to a superior offer,” Sprint said in its statement. “The Sprint board of directors has not changed its recommendation with respect to, and continues to support, the company’s pending transaction with SoftBank.”
Sprint didn’t previously give Dish access to certain detailed financial information, a key step in the merger process, in part because of concern over the satellite carrier’s ability to fund the proposal, people familiar with the discussions said this month.
Sprint’s directors also have doubts about Dish’s estimates that the merged company would have $11 billion in cost savings, people familiar with the deliberations said this month.
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