Sprint Nextel shareholders today voted overwhelmingly to approve a majority acquisition offer by Japan’s wireless carrier SoftBank Corporation (TSE: 9984). Softbank is fronting $16.64 billion in cash for about 78 percent of Sprint, and will also invest an additional $5 billion in the company.
SoftBank was fighting for the Sprint deal with US cable and satellite conglomerate Dish, which in April said it would pay $25.5 billion for Sprint. After SoftBank in June increased its bid to $21.6 billion and Sprint’s board of directors then hinted that they would reject Dish’s offer, the cable company decided not to increase its bid further. The new bid from SoftBank has won the backing of Sprint’s second biggest shareholder Paulson & Co., which had previously favored Dish’s bid, according to a report from Reuters.
Sprint shareholders approved the deal at a special shareholders meeting with approximately 98 percent of the votes cast, representing about 80 percent of Sprint’s outstanding common stock. The companies anticipate that pending FCC approval, the merger will begin in early July.
Sprint will use the money from SoftBank towards its current 4G network upgrade, as well as its proposed buyout of the minority shareholders of wireless service provider Clearwire Corp (CLWR.O), in which Sprint already has a majority stake. Last week Sprint was forced to up its bid for Clearwire to $5 per share from $3.40 per share to beat a rival bid of $4.40 per share from Dish. This didn’t please Sprint’s board, which said it would sue Clearwire over its “illegal” bidding tactics. (Lesson to Dish: if you want to buy a company, you don’t fight with that company for control of another.)
Clearwire shareholders will vote on the Sprint proposal on July 8. Sprint expects a majority of the non-Sprint Clearwire stockholders to support its buyout, largely thanks to a group of influential Clearwire stockholders who have already voted in favor of the Sprint SoftBank transaction.
As part of the SoftBank deal, Sprint stockholders will have the option to receive cash in the amount of $7.65 or one of “New Sprint” common stock for each share of Sprint common stock owned by them. Current Sprint stockholders’ resulting equity ownership in the new Sprint will be 22 percent, while SoftBank will own about 78 percent.
