Speculation began last week when The Wall Street Journal reported that Japanese company Softbank would buy a controlling interest in troubled N0.3 U.S. wireless company Sprint Nextel Corp. (NYSE: S). CNBC claims the deal is sealed and will involve a $20 billion payment for a 70% interest in the American public company:
Softbank and Sprint have reached a deal under which Softbank will pay $20 billion for a 70 percent stake in the wireless telecom operator, according to people close to the situation.
The deal is expected to be announced Monday morning and while certain details are still being worked out, the boards of both companies have signed off on a transaction under which Softbank will buy $8 billion worth of shares directly from Sprint and tender for another $12 billion worth of the shares from existing holders.
The price of the tender offer is $7.30 a share, a large premium to Sprint's current price. Given the deal's structure, it will not require a shareholder vote.
There is a great deal of puzzlement about how Softbank will get back its investment, particularly for the premium it will pay. Sprint has had years of failure working to right its own fortunes. Since Softbank has no U.S. operations, it cannot give Sprint any tactical help as it tries to turn around.
Douglas A. McIntyre