Dish Network bids $25.5 billion for Sprint
Ergen had been trying to purchase network supplier Clearwire, but despite offering more than Sprint for the company, the fact that Sprint already owned a majority stake in Clearwire made the task close to impossible. Now, Dish will end up with Clearwire after all, along with the rest of the nation's third largest carrier. If the deal goes through, it will allow for $11 billion in cost savings. Ergen hopes to bundle Sprint's wireless service with satellite content for television from Dish.
The ball is in Softbank's court. It can decide to raise its bid or even offer to buy the entire company although that might result in regulatory issues. On the other hand, it could decide to walk away and let Dish Network purchase Sprint.
source: DISHNetwork via Engadget
U.S. technology leader with track record of disrupting entrenched incumbents presents superior alternative to pending SoftBank proposal – DISH offers more cash and a greater ownership stake
Sprint shareholders would receive $7.00 per share, consisting of $4.76 in cash and stock representing approximately 32% in a company with a significantly enhanced strategic position
Creates an industry-leading spectrum portfolio and the only company that can offer customers a fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services
Delivers substantial synergies and growth opportunities estimated at $37 billion in net present value, including an estimated $11 billion in cost savings
ENGLEWOOD, Colo.–(BUSINESS WIRE)–DISH Network Corporation (NASDAQ: DISH) today announced that it has submitted a merger proposal to the Board of Directors of Sprint Nextel Corporation (NYSE: S) for a total cash and stock consideration of $25.5 billion. The DISH proposal clearly represents superior value to Sprint shareholders, including greater ownership in a combined company that is better positioned for the future with more spectrum, products, subscribers, financial scale and new opportunities.
DISH is offering Sprint shareholders a total consideration of $25.5 billion, consisting of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7.00 per share, based upon DISH's closing price on Friday, April 12, 2013. This consists of $4.76 per share in cash and 0.05953 DISH shares per Sprint share. The cash portion of DISH's proposal represents an 18% premium over the $4.03 per share implied by the SoftBank proposal, and the equity portion represents approximately 32% ownership in the combined DISH/Sprint versus SoftBank's proposal of a 30% interest in Sprint alone. Together this represents a 13% premium to the value of the existing SoftBank proposal.
"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."
Mr. Ergen continued, "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. 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 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."
The proposed combination will result in synergies and growth opportunities estimated at $37 billion in net present value, including an estimated $11 billion in cost savings.
DISH has provided additional information regarding the proposed merger via a dedicated transaction microsite that can be accessed at http://www.CompleteDishSolution.com.
Barclays is acting as financial advisor to DISH.
Following is text of the letter that DISH sent to Sprint Nextel Corp. Board of Directors on April 15, 2013.
Board of Directors
Sprint Nextel Corporation
6200 Sprint Parkway
Overland Park, KS 66251
Attn: James H. Hance, Jr., Chairman of the Board
On behalf of DISH Network Corporation ("DISH"), I am submitting this proposal for a merger between DISH and Sprint Nextel Corporation ("Sprint"). Our proposal provides Sprint shareholders with a superior alternative to the pending SoftBank Corporation ("SoftBank") proposal. It provides more cash and affords your shareholders the opportunity to participate more meaningfully in a combined DISH/Sprint, which will benefit from a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.
We are offering Sprint shareholders a total consideration of $25.5 billion, consisting of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7.00 per share, based upon DISH's closing price on Friday, April 12, 2013. This consists of $4.76 per share in cash and 0.05953 DISH shares per Sprint share. The cash portion of our proposal represents an 18% premium over the $4.03 per share implied by the SoftBank proposal, and the equity portion represents approximately 32% ownership in the combined DISH/Sprint versus SoftBank's proposal of a 30% interest in Sprint alone. Together this represents a 13% premium to the value of the existing SoftBank proposal.
Our proposal provides a highly-compelling and unique opportunity for Sprint shareholders. We are offering an ownership interest in a combined company with a comprehensive product and services suite, a significantly enhanced subscriber base, considerable financial and operating scale, as well as a spectrum portfolio that would lead the industry. As a result, this merger creates sizable cost and CAPEX savings and promises extensive new revenue opportunities.
Leveraging both companies' existing assets and expertise, we will be the only company able to offer a fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services to meet rapidly evolving customer preferences. The new company's assets will immediately establish national cross-platform leadership and will position the company to deliver innovative services while expanding our collective subscriber base.
The proposed combination will result in synergies and growth opportunities estimated at $37 billion in net present value. This includes an estimated $11 billion in cost savings, representing approximately $1.8 billion in annual run-rate cost synergies by the third year after closing.
Further, our combined national footprints and scale will allow us to efficiently develop our joint spectrum assets to provide advanced services to the millions of homes with inferior or no access to competitive broadband services.
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. DISH has consistently led our industry in service and technology delivery with award-winning innovations like Hopper® with Sling®. Our history of value creation is outstanding. Investors in our 1995 initial public offering have enjoyed a total return of 27 times their original investment, significantly outperforming the broader markets and our peers. We also have a proven track record of responsible capital management.
DISH has significant experience structuring and consummating strategic transactions and only needs to complete confirmatory due diligence, which we believe can be done quickly with your cooperation. 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. Though not a condition of our proposal, we anticipate that the pending transaction with Clearwire would be completed. We are confident that we can obtain all necessary approvals within a reasonable timeframe.
We intend to fund the $17.3 billion cash portion of the transaction using $8.2 billion of our balance sheet cash and additional debt financing. We have a proven track record in raising capital to fund strategic initiatives and have received a Highly Confident Letter from our financial advisor, Barclays, confirming our ability to raise the required financing.
We would be pleased to discuss our plans for the combined company and we are available at any time to meet with the Sprint Board, management and advisors to answer any questions about our proposed merger. We are confident that the Sprint Board will share our view that this proposed merger offers an excellent opportunity for the equity holders of Sprint to realize a superior value for their shares that is unavailable to them under the SoftBank proposal.
While it would have been our preference to have confidential discussions regarding this proposed merger, your existing agreement with SoftBank and the impending deadlines associated with your shareholder vote, will compel us to confirm our intentions publicly. We look forward to hearing from you.
Very Truly Yours,
DISH Network Corporation
1. wiiandds (Posts: 27; Member since: 15 Mar 2013)
As long as they still keep Sprint's subsidiary, it sounds like i good deal.
20. maier9900 (Posts: 257; Member since: 17 Dec 2011)
There was also an article about Dish N. bidding to buy T-mobile. They're going to buy every wireless carrier in the U.S. and call it Dish Mobile.
2. tigermcm (Posts: 563; Member since: 02 Sep 2009)
well dang I must have been sleeping under a rock or something because I thought Sprint and Softbank were done with their lil merger/buy out plan
7. lovenyc8 (Posts: 164; Member since: 13 Mar 2013)
go dishnetwork anyone who buy it from the usa is cool don;t like outsiders buying USA companys.
13. a_merryman (Posts: 362; Member since: 14 Dec 2011)
So clearly you don't like Verizon or T-mobile...since nearly half of Verizon is owned by Vodafone and t-mobile is owned by Deutsche Telekom AG. Most of the large corporations are multinational organizations.....just because they're from America doesnt mean the majority of their employees are, or even that it is American owned or run.
14. lovenyc8 (Posts: 164; Member since: 13 Mar 2013)
its better when an amercian company is bought by an amercian company. because they would understand the amercian market better. plus if japan bought sprint the prices would go up because everythign in japan is expansive and they would move it the way cell phones companies in japan move and perices rules. tmobile is diffrent they are doing great and there prices are good and there plans are good, verzion on there other hand has crazy plans and greedy company the same would happen if japan bought it
15. a_merryman (Posts: 362; Member since: 14 Dec 2011)
I'm going to go out on a limb here and say that the Wireless carrier understands the wireless carrier and regulations better then the satellite TV provider. Please tell me how a Japanese company buying Sprint would make the prices go up "because everything in Japan is more expensive"...thats some 3rd grade thinking on markets right there. There are reasons Japan is more expensive...its an island nation with little natural resources.
T-mobile is not different in this at all, it is 100% foreign owned...and it's the cheapest. Verizon is greedy....can't argue that. Another reason why the Softbank/Sprint merger is better, is b/c Clearwire's spectrum is the same spectrum that Softbank is deploying its 4g on...along with the rest of the world. Which means that Sprint and Softbank can buy the equipment to deploy it in larger orders which means lower prices. And the possibility of being able to roam on Softbanks network if you're in Japan and vice versa.
17. lovenyc8 (Posts: 164; Member since: 13 Mar 2013)
well i think it would be too many changes will happen if softbank will buy sprint and people don't like change. but i agree on softbank buying it would be better for them because they have the experince with wireless carrier better than dishnetwork. but lets see what happens
8. gmracer1 (Posts: 646; Member since: 28 Dec 2012)
Sprint's Market Cap is $21B and Dish's bid is $25.5B? LOL
9. ZeroCide (Posts: 594; Member since: 09 Jan 2013)
If Dish buys Sprint I feel this is the downfall of sprint. To let a cable TV company run a cell phone netwok is not good. Dish isn't exactly in good shape. Dish was good but they ran that company poorly. It is one of the word cable TV providers out there. You can see Cable TV pricing models are extremely stupid. If they bring these models to Spint this is surely the end of spints great pricing model.
11. downphoenix (Posts: 1991; Member since: 19 Jun 2010)
Dish network isnt a cable tv company. They are a satellite tv company. And they have had good marks in customer service so their pricing model cant be that bad. Its cheaper than Directv for sure.
10. downphoenix (Posts: 1991; Member since: 19 Jun 2010)
Could have swore Softbank bidded more.
I think Dish would be a better suit though. There isnt any overlap (or at least very little) since they are different industries. Also being able to bundle wireless with their TV services would give them value added incentive over something like what AT&T offers and also will be a benefit Sprint customers that also use Dish can take advantage of.
12. ardent1 (Posts: 1864; Member since: 16 Apr 2011)
DISH screwed up it's offer. Traditionally, the bid is an average of 30% premium to closing price. Additionally, a significant amount of the bid is in DISH stock, which fell with the bid. Third, DISH's financing is NOT secured as it only as a "Highly Confident Letter" from the Investment Banker.
16. JEverettnow (Posts: 93; Member since: 11 Mar 2013)
What sucks is Sprint's 4g LTE network being built out was completely dependent on the softbank deal. Now that that deal may not go through in May, the network will be slow and sparse until a dish deal goes through. This company can't afford another year of losing subscribers due to the horrible network. Not cool!
19. VAPlaya1 (Posts: 4; Member since: 31 Oct 2012)
If DISH were the buyer..that just might not be to bad. As long as they don't change Sprint to a Verizon type, money hungry, charge to much company. (Keep the unlimited plans that is), I'm good!
21. snowgator (Posts: 3015; Member since: 19 Jan 2011)
Let's just hope if this goes through, that Dish has better luck with Sprint then they did with Blockbuster.
So far, not so good on that one.