Sprint Nextel confirmed Monday it has received an unsolicited proposal from DISH Network to acquire the company for $25.5 billion, saying “its Board of Directors will evaluate this proposal carefully and consistent with its fiduciary and legal duties.”
Early Monday, DISH Network laid out an offer of $17.3 billion in cash and $8.2 billion in DISH stock to challenge Tokyo’s Softbank Corp.’s bid for the U.S. mainland’s third-largest wireless carrier. Softbank agreed to pay $20 billion for a 70 percent stake in Overland, Kansas-based Sprint in October 2012.
DISH Network’s offer, including the assumption of debt, would have a total value of $35 billion, the company said.
“The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal,” said Charlie Ergen, Chairman of DISH Network. “Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly-enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.”
Sprint shareholders would receive $7 per share, consisting of $4.76 in cash and stock representing approximately 32 percent in a company with a significantly enhanced strategic position, DISH Network outlined in its proposal.
The cash portion of DISH’s proposal represents an 18 percent premium over the $4.03 per share implied by the SoftBank proposal, and the equity portion represents approximately 32 percent ownership in the combined DISH/Sprint versus SoftBank’s proposal of a 30 percent interest in Sprint alone, DISH further noted. Together this represents a 13 percent premium to the value of the existing SoftBank proposal.
“A transformative DISH/Sprint merger will create the only company that can offer customers a convenient, fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services,” Ergen said. “Additionally, the combined national footprints and scale will allow DISH/Sprint to bring improved broadband services to millions of homes with inferior or no access to competitive broadband services.”
This is the second time in as many years that DISH Network has expressed an interest in the wireless telecom sector. In December 2011, the company announced its interest in partnering with T-Mobile USA if the proposed merger with AT&T unraveled, like it ultimately did.
Over the past two years, DISH Network has picked up quite a bit of spectrum assets through the acquisitions of DBSD North America Inc. and Terrestar Networks Inc.
Unique, combined company
“This unique, combined company will have a leadership position in video, data and voice and the necessary broadband spectrum to provide customers with rich content everywhere, all the time,” he added. “I am proud of the company we have built and believe we will be an excellent partner to Sprint.”
“Like Sprint, DISH possesses a strong tradition of innovation and industry leadership. We created the third largest pay-TV provider while competing with incumbent cable monopolies and other entrenched operators,” said Ergen in a letter sent to Sprint Nextel’s Board of Directors Monday.
DISH has significant experience structuring and consummating strategic transactions and only needs to complete confirmatory due diligence, which it believes can be done quickly with Sprint Nextel’s cooperation, Ergen further noted.
“We have examined your merger agreement with SoftBank and we would be prepared to execute a definitive merger agreement on substantially similar terms and conditions,” he added.
Sprint, meanwhile, opted to stay mum Monday, saying it does not “plan to comment further until the appropriate time.”
The unsolicited offer comes two days before Sprint is expected to announce the completion of its next-generation LTE wireless platform in Puerto Rico, which it has been rolling out for the past year. A press conference is slated for Wednesday in San Juan.