Japan’s Softbank yesterday said it was raising its bid for US firm Sprint Nextel to US$21.6 billion, the latest twist in a high-stakes bid to trump a rival offer and grab a chunk of the lucrative US mobile market.
Softbank said it would raise its original bid by US$1.5 billion, just two weeks before Sprint shareholders vote on the proposed takeover of the US-based wireless carrier.
A joint Softbank-Sprint statement yesterday encouraged Sprint investors to vote for the deal at the June 25 meeting, saying a rival US$25.5 billion bid from US satellite communications firm Dish Network was “not reasonably likely to lead to a superior offer.”
In April, Softbank chief Masayoshi Son painted his deal as superior to the Dish bid, saying his firm had more experience in debt-financed takeovers and Softbank’s bid could be consummated one year earlier than its rival.
The proposed takeover would see already heavily indebted Softbank taking on even more debts.
The Sprint shareholder meeting was originally scheduled for today, but the joint release announced it had been delayed.
Toshihiko Matsuno, a strategist at SMBC Friend Securities, said Softbank had little choice but to sweeten its offer in the face of the Dish bid.
“It underlines Softbank’s determination to buy Sprint,” Matsuno said.
However, delaying the shareholders’ meeting “could indicate in many cases that more time is needed to resolve outstanding issues,” he added.
The new Softbank bid would see it control 78 percent of Sprint, the third-largest US mobile carrier, up from 70 percent originally.
“We have decided to change part of the contents of the deal through negotiations with Sprint in the wake of a counter-proposal of takeover by Dish Network Corporation,” Softbank said.
Under the revised deal, Softbank would offer Sprint shareholders US$16.6 billion in cash compared with US$12.1 billion previously, but the complicated deal would reduce the amount of capital that the US firm would receive.
Softbank’s Tokyo-listed shares jumped 1.26 percent shortly after the announcement, but the shares finished down 0.36 percent to ￥5,500 as the broader market dipped 1.45 percent.
Last month, US national security officials approved Softbank’s planned takeover, in what would be the biggest overseas acquisition by a Japanese firm.
Under the agreement, any merger must see the appointment of an independent member to the Sprint board of directors to serve as security director.
The agreement also requires that US agencies will have a one-time authority to demand Sprint remove and decommission equipment as part of Sprint’s proposed takeover of the broadband company Clearwire, a transaction separate from the Softbank-Sprint deal.