SoftBank Corp. (9984)’s $21.6 billion bid for mobile carrier Sprint Nextel Corp. (S) won approval from the last U.S. regulatory body reviewing the transaction, said people familiar with the matter.
All three members of the Federal Communications Commission have voted for the deal, said the people, who asked not to be identified because the matter hasn’t been made public. The approval also covers Sprint’s offer to buy the half of wireless operator Clearwire Corp. (CLWR) it doesn’t already own.
The approval sanctions a re-ordering in the U.S. market by boosting No. 3 Sprint against larger rivals Verizon Wireless and AT&T Inc. (T) as SoftBank billionaire founder Masayoshi Son seeks to create the world’s largest carrier. The fourth- and fifth-largest U.S. carriers combined May 1 into T-Mobile US Inc. after that company bought MetroPCS Communications Inc.
“This clears a hurdle, so it’s almost finalized,” said Masamitsu Ohki, a fund manager at Stats Investment Management Co., a hedge fund in Tokyo. “The acquisition makes sense to fulfill Son’s expansion strategy.”
Justin Cole, an FCC spokesman, declined to comment. Takeaki Nukii, a spokesman for Tokyo-based SoftBank, also declined to comment on the FCC process, as did John Taylor, a spokesman for Sprint’s Washington office.
Market Data
SoftBank fell 1.7 percent to 5,800 yen as of the close of trade in Tokyo, paring this year’s gain to 85 percent. Sprint closed up 4 cents at $7.19 in New York.
SoftBank won a bidding war for Sprint and trumped a run at Clearwire by Englewood, Colorado-based Dish Network Corp. The rebuffed satellite provider may turn its attention to T-Mobile if it still intends to enter the wireless industry, according to Stifel Financial Corp.
Sprint shareholders approved the deal June 25. SoftBank will own 78 percent of Sprint, based in Overland Park, Kansas. Clearwire investors are due to vote on Sprint’s offer at a July 8 meeting.
SoftBank has pledged innovative pricing and network investments at Sprint to help it gain market share from Verizon and AT&T. The combined company will be the sixth-largest telecommunications company globally by revenue and the second-biggest among mobile Internet carriers, according to data compiled by Bloomberg.
Public Interest
The FCC’s review of the SoftBank-Sprint deal was to determine whether the transfer of control of Sprint’s airwaves is in the public’s interest.
U.S. antitrust and security officials earlier cleared SoftBank’s bid. The companies gave assurances they would limit use of telecommunications gear made by Huawei Technologies Co., based in Shenzhen, China.
A congressional committee last year said Huawei and ZTE Corp. provide opportunities for Chinese intelligence services to tamper with telecommunications networks for spying. Huawei has said its exclusion is “misguided” and doesn’t resolve vulnerabilities arising from common global equipment supply chains.
The SoftBank takeover caps a turnaround effort for Sprint Chief Executive Officer Dan Hesse, who was hired in 2007 to fix the money-losing company after a $36 billion acquisition of Nextel — a deal that mostly had to be written off. Sprint also didn’t get to sell Apple Inc.’s iPhone until after AT&T and Verizon, contributing to the loss of more than 8 million monthly subscribers.
Increased Offer
Son, the 59th-richest person according to the Bloomberg Billionaires Index, will serve as chairman of Sprint with SoftBank Holdings Inc. President Ron Fisher becoming vice chairman.
Sprint initially forged a deal with SoftBank in October, agreeing to sell 70 percent of the company for $20.1 billion. Dish offered $25.5 billion for Sprint in April, though its terms were structured differently and not directly comparable to SoftBank’s price. Dish also never submitted a firm enough bid to be “actionable,” Sprint said.
To seal the deal, SoftBank raised its bid to $21.6 billion for 78 percent of Sprint on June 10. The transaction also shifted more cash away from investing in Sprint’s business, an effort to sweeten the pot for shareholders.
Source: Bloomberg
