Japanese Carrier Softbank Acquires 70% Stake In Sprint For $20.1 Billion

Softbank Sprint

As reported last week, Japanese carrier Softbank has acquired a 70% stake in Sprint Nextel – the third largest carrier in the US for $20.1 billion. It’s the most a Japanese company has spent on an acquisition.

Softbank will buy $8 billion in shares directly from Sprint, and another $12 billion from existing stakeholders at $7.30 per share, which works out to a premium of 27% premium from Friday’s close.

The deal was announced at a news conference in Tokyo by Softbank’s billionaire founder and chief Masayoshi Son and Sprint CEO Dan Hesse earlier today.

Hesse said the Softbank investment would give Sprint opportunities it hadn’t had since he joined the firm in late-2007. “This is pro-competitive and pro-consumer in the U.S. because it creates a stronger No. 3 … it competes with the duopoly of AT&T and Verizon. When you look at what Softbank has accomplished in Japan with the No. 3 carrier, it’s something we can learn from,” he said. [..]

[..] Son acknowledged that a move for Sprint was risky, but he said doing nothing was riskier still.

“It could be safe if you do nothing and our challenge in the U.S. is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built,” he told the news conference.

“But not taking this challenge will be a bigger risk,” he said, adding his firm needed to break out of Japan’s fast-ageing domestic market.

Softbank was Apple’s exclusive iPhone carrier partner in Japan until last year, whereas Sprint started offering Apple’s iPhone only from last year.

Sprint has been lagging behind Verizon and AT&T with regards to 4G LTE coverage, so the multibillion-dollar cash injection should also help the company to roll out its 4G LTE network a lot faster than it had planned.

[via Reuters]

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