Monday, October 15, 2012

SoftBank Deal Injects $8 Billion in Capital into Sprint

SoftBank will invest $20.1 billion to acquire a 70% in Sprint.  The deal consists of $12.1 billion to be distributed to Sprint stockholders and $8.0 billion of new capital to strengthen Sprint’s balance sheet.  The investment aims to accelerate Sprint's next generation network and its competitive position as the No. 3 U.S. mobile operator.  For Softbank, this represents a major leap beyond its home market of Japan, where it is the No. 3 mobile operator and No. 2 wireline broadband provider. The companies hope to get the deal done by mid-2013, pending regulatory approvals.

Under the deal, approximately 55% of current Sprint shares will be exchanged for $7.30 per share in cash, and the remaining shares will convert into shares of a new publicly traded entity, New Sprint. Following closing, SoftBank will own approximately 70% and Sprint equity holders will own approximately 30% of the shares of New Sprint on a fully-diluted basis.

  • $8.0 billion of primary capital to enhance its mobile network and strengthen its balance sheet
  • No action on Clearwire at the moment, other than supporting the existing agreement.
  • New Sprint’s headquarters will continue to be in Overland Park, Kansas.
  • New Sprint will have a 10-member board of directors, including at least three members of Sprint’s board of directors.
  • Dan Hesse will continue as CEO of New Sprint and as a board member.
 “This transaction provides an excellent opportunity for SoftBank to leverage its expertise in smartphones and next-generation high speed networks, including LTE, to drive the mobile internet revolution in one of the world’s largest markets. As we have proven in Japan, we have achieved a v-shaped earnings recovery in the acquired mobile business and grown dramatically by introducing differentiated products to an incumbent-led market. Our track record of innovation, combined with Sprint’s strong brand and local leadership, provides a constructive beginning toward creating a more competitive American wireless market,” stated SoftBank Chairman and CEO, Masayoshi Son.

 “This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward. Our management team is excited to work with SoftBank to learn from their successful deployment of LTE in Japan as we build out our advanced LTE network, improve the customer experience and continue the turnaround of our operations,” said Dan Hesse, Sprint's CEO.



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