Sprint Nextel Corp. (S) investors should accept SoftBank Corp.’s $20.1 billion takeover bid, Institutional Shareholder Services said in a report that didn’t offer an opinion on a counterbid from Dish (DISH) Network Corp.
The SoftBank proposal would provide Sprint with capital to acquire additional spectrum and complete the transformation of its network, said ISS, the biggest shareholder-advisory firm, in a report dated May 31. ISS didn’t determine whether Dish’s $25.5 billion offer is superior because it hasn’t yet been presented to shareholders.
“Given the preliminary nature of the Dish offer -- and in particular that shareholders may not themselves affirmatively choose that offer over the SoftBank transaction, as Dish has not yet made its offer directly through a tender -- ISS has not developed a view,” the firm said.
Sprint investors are scheduled to vote June 12 on the SoftBank offer. SoftBank and Dish are competing for control of Sprint, the third-biggest U.S. mobile-phone carrier, as they seek to convert it into a stronger competitor against Verizon Wireless and AT&T Inc. (T)
“SoftBank can’t rely on an ISS recommendation to get their deal done,” said Walt Piecyk, an analyst with BTIG LLC in New York. He said SoftBank needs “to take control of the situation” and sweeten “both the Sprint and Clearwire offers soon to use the upcoming vote dates to their advantage.”
Dish and Sprint, in a separate battle, are each trying to win control of Clearwire Corp.
Cheryl Gustitus, a spokeswoman for Rockville, Maryland-based ISS, didn’t respond to a message seeking comment after business hours. Bob Toevs, a spokesman for Dish, declined to comment.
SoftBank is “pleased that ISS recognizes the value proposition of our agreed transaction,” Ron Fisher, SoftBank (9984) Holdings Inc. president, said in an e-mailed statement.
While Dish announced its offer for Sprint in April, it only won access to the wireless company’s private financial data on May 20, allowing it to build a case for the superiority of its offer over SoftBank’s. ISS can’t develop an opinion on Dish’s offer until the satellite carrier formally proposes a tender offer to shareholders, the advisory firm said.
Sprint needs more investment to bulk up its long-term evolution network to offer faster Internet speeds, helping it lure subscribers from AT&T and Verizon, ISS said. SoftBank offers the resources and experience to help Sprint, it said.
“From a strategic perspective, the deal addresses Sprint’s most compelling need: capital to acquire additional spectrum and complete the transformation of its network, enabling it to fully compete in the U.S. market,” ISS said.
The report from ISS follows a recommendation from Egan-Jones Ratings Co. that Sprint investors reject SoftBank’s proposal. SoftBank is probably preparing an improved offer, and Dish remains in talks with Sprint, so it’s best to hold out for now, Egan-Jones said May 31.
Large investors use advisory firms to help guide their decisions on shareholder votes, though they’re not bound to follow their guidance. Earlier this year, Deutsche Telekom AG raised its offer for MetroPCS Communications Inc. after ISS rejected its original bid.
Dish, the second-biggest U.S. satellite-TV provider, has waged a separate fight with Sprint for control of Clearwire (CLWR), the Bellevue, Washington-based wireless Internet company. Dish raised its bid May 29 for Clearwire shares to $4.40, 29 percent higher than Sprint’s offer, forcing Sprint to choose whether to counterbid, and potentially affecting SoftBank’s plans.
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