Holders of 97% of Sprint to Get Cash in SoftBank Takeover

Sprint Nextel Corp. investors mostly opted to receive cash rather than stock in SoftBank Corp.’s takeover of the wireless carrier, creating more demand than SoftBank could accommodate.

Of the 3 billion shares outstanding as of July 5, holders of about 53 percent elected to get cash and 44 percent didn’t make a choice, which means they will receive cash, Sprint and SoftBank said in a statement today. Because the available cash consideration was oversubscribed, they stand to get approximately $5.65 in cash for each share and 0.26 shares of new Sprint common stock.

The $21.6 billion takeover won clearance from the Federal Communications Commission last week, following shareholders’ approval of the offer in June. The fact that only about 3 percent of shareholders opted to receive shares in the deal signals that most aren’t going to stick around to see what happens to the new company, said Chris King, an analyst at Stifel Nicolaus & Co. in Baltimore.

“A lot of Sprint shareholders were probably playing the M&A game and aren’t really interested in riding it out operationally with the company for the long run,” said King, who has a hold rating on the stock.

Clearwire Deal

The FCC also approved Overland Park, Kansas-based Sprint’s offer to buy the half of wireless operator Clearwire Corp. it doesn’t already own. Clearwire shareholders voted today in favor of the deal, which is expected to close tomorrow, according to the company.

SoftBank’s takeover of Sprint, which comes with a cash infusion, stands to make the carrier a bigger competitor to the nation’s two biggest mobile-phone services, Verizon Wireless and AT&T Inc. SoftBank’s founder, Japanese billionaire Masayoshi Son, has pledged to use innovative pricing and network investments to gain an edge.

Sprint shares fell 1.3 percent to $7.07 at the close in New York. The stock had climbed 25 percent this year.

After the merger is completed, investors may revisit the new company, said Kevin Roe, founder of Roe Equity Research in Dorset, Vermont.

“Traditional telecom investors will certainly take another hard look at Sprint’s prospects once SoftBank has fully articulated their operational, financial and management strategy for the new Sprint/Clearwire,” he said.

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