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SoftBank investment in Sprint set to close this week

SoftBank spent $21.6 billion to gain a 78% stake in Sprint

Financial trends and news by Steven Loeb
July 8, 2013
Short URL: http://vator.tv/n/307f

More than nine months after announcing that it was going to be purchasing a majorty stake in Sprint, SoftBankhas finally declared that the end of the deal is in sight.

"SoftBank Corp. will invest approximately USD 21.6 billion (approximately JPY 1.8 trillion*) in Sprint Nextel Corporation and currently anticipates consummating the transaction on July 10, 2013 (EDT)," the company wrote in a very very brief press release put out on Monday. 

The deal, which was struck in October, was originally for $20.1 billion, and included $12.1 billion paid out to shareholders and $8 billion in new capital to strengthen Sprint’s balance sheet.  Softbank, it was revealed, would be acquiring 55% of Sprint shares at $7.30 a piece in cash.

The financials of the deal were then revised in June, bringing the total deal up to $21.6 billion, with $16.6 being paid to shareholders, and $5 billion to strengthen the balance sheet. No reason for the revised numbers was given.

As per the deal, SoftBank also announced that it would be forming a new U.S. subsidiary, New Sprint, which will invest $3.1 billion in a newly issued Sprint convertible senior bond. In the revised agreement it was revealed that SoftBankwill own roughly 78% of the fully-diluted shares of New Sprint, which will own 100% of the shares of Sprint.

Around the same time that the deal was being updated, Sprint's Special Committee and Board of Directors unanimously approved the amended Merger Agreement. It was then approved by Sprint shareholders at the end of month, before finally getting the go-ahead to complete the deal from the Federal Communications Commission last week. 

The acquisition was underwritten by Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, and the Tokyo branch of Deutsche Bank.

Despite taking Spring to some new lows since took the helm five years ago, Sprint CEO Dan Hesse will be staying on.

At its height in 1999, Sprint shares were trading for more than $71 a piece, but Hesse joined the team right around the time Apple debuted the first iPhone.  Saddled with $15 billion in debt, Sprint has had to struggle with the stranglehold that AT&T and Verizon have on the wireless market. 

Shares of Sprint are down 1.12% in Monday trading, or cents to $7.08 a share. Meanwhile, shares of SoftBank have taken an even bigger hit Monday, going down 3.03% or $1.77 to $56.66 a share.

(Image source: http://www.theverge.com)


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