Satellite TV provider Dish Network has offerred to acquire No. 3 U.S. carrier Sprint Nextel for $25.5 billion, bettering Softbank’s earlier bid of $20.1 billion for 70 percent stake of the company. Dish’s acquisition deal, a combination of cash and stock, represents a 13 percent premium over Softbank’s offer, taking the company’s stock up by as much as 17.8 percent.
From Dish’s offer letter:
We are offering Sprint shareholders a total consideration of $25.5 billion, consisting of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7.00 per share, based upon DISH’s closing price on Friday, April 12, 2013. This consists of $4.76 per share in cash and 0.05953 DISH shares per Sprint share. Together this represents a 13% premium to the value of the existing SoftBank proposal.
Sprint has issued a comment on Dish’s offer saying:
Sprint Nextel today confirmed it has received an unsolicited proposal from DISH Network to acquire the Company. The Company said that its Board of Directors will evaluate this proposal carefully and consistent with its fiduciary and legal duties. The company does not plan to comment further until the appropriate time.
Dish’s offer is seen as an attempt to expand from the slow-growing pay television market segment to the wireless industry, whose growth is tied to the ever increasing smartphone penetration in the U.S. The TV provider owns billions of dollars worth wireless spectrum, which, coupled with Sprint’s existing infrastructure, would create a lot of value for customers of both companies.
Dish’s Chairman, Charlie Ergen, says that, if the acquisition goes through, it would make Dish/Sprint the “only company that can offer customers a convenient, fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services.”
The U.S. telecom industry has seen a number of acquisition/merger attempts:
- In 2011, AT&T attempted to buy T-Mobile, but withdrew its bid following regulatory concerns
- T-Mobile is now in the middle of a merger with MetroPCS.
- There have also been rumors of Verizon and AT&T jointly bidding for Vodafone, however this was denied later on.
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