SoftBank Jumps 1 Hurdle In Its Bid for Sprint

SoftBank can check off one more item on its to-do list in its mission to acquire Sprint Nextel . On Thursday, the Japanese telecom announced the Securities and Exchange Commission gave its OK for Sprint to begin mailing proxy materials to shareholders regarding the upcoming vote on the transaction.

That vote will be held June 12 at a special shareholders' meeting, and it goes without saying (but I am saying it anyway) that SoftBank will be encouraging Sprint investors to vote for the proposal.

But the SEC thumbs up was just a small barrier compared to what SoftBank will have to scramble over before it can close on the deal.

DISH Network announced two weeks ago that it, too, wanted to buy Sprint, offering $25.5 billion compared to the $20.1 billion SoftBank bid. SoftBank's challenge will be to convince the Sprint shareholders that the DISH offer is less than what it seems.

That process began earlier this week when SoftBank CEO Masayoshi Son held a press conference in Tokyo questioning the veracity of DISH's claim that its offer would be worth $7 a share. "I would say the number is wrong. Totally wrong. It is incomplete and illusory," Son said.

Son brought up other counters to the DISH bid including the claim that DISH did not have committed financing and its leverage would be twice that of SoftBank's.

Son also scoffed at the satellite pay TV provider's lack of wireless experience. When asked about what expertise DISH could bring to a partnership with Sprint, Son asked, "Do you want to attach a satellite dish to your smartphone?"

DISH's reply
As expected, DISH was ready with a response, but it wasn't one that defended its numbers. Instead, DISH filed a letter with the Federal Communications Commission repeating media accounts regarding a Department of Justice investigation of bribery charges against telecommunications equipment provider UTStarcom . The DISH filing says Masayoshi Son was chairman of the board of UTStarcom during part of the time in which the bribery was said to occur.

UTStarcom admitted to giving $7 million to Chinese government officials for sales contracts. That act was a violation of the Foreign Corrupt Practices Act.

"Dish believes that this information is relevant to the public interest analysis of the proposed transaction, and that it is incumbent upon the proposed transferee SoftBank to provide a full explanation of these matters," the filing said.

A further mountain to climb for SoftBank is this: In January the DOJ, FBI, and Department of Homeland Security asked the FCC to hold off on evaluating the public merits of the transaction to give those law enforcement agencies time to thoroughly assess the national security implications of the merger.

So even though it got the SEC's approval, SoftBank will still have to get through the gauntlet one step at a time.

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