Dish Network Offers $25.5 Billion for Sprint Nextel

April 15, 2013

Dish Network (NASDAQ:DISH), the second largest US satellite television provider, on Monday made a $25.5 billion (₤16.6 billion) bid for Sprint Nextel (NYSE:S), the third largest mobile operator in the country, challenging an acquisition offer for the third-largest US wireless carrier made by Japan’s Softbank.

Under the deal proposed by Dash, Sprint shareholders would get $7 a share, consisting of $4.76 in cash and about $2.24 in Dish stock, based on last Friday’s closing price.
“Sprint is in play,” Dish Chairman Charles Ergen told The Wall Street Journal on Monday. “We think we’ve made an offer that’s much more compelling than the Softbank transaction.” Control of the company would rest with Dish shareholders and Ergen would be the largest shareholder.

Sprint, agreed in October last year to sell 70 percent of its shares to Softbank for $20 billion (₤13 billion) but Dish said its own offer was represented a premium of about 13 percent to Softbank’s bid and would result in estimated cost savings of $11 billion (₤7.2 billion). “The Dish proposal clearly presents Sprint shareholders with a superior alternative to the pending Softbank proposal,” said Ergen. He also pointed out that a “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.”

In its offer Dish said it would be able to combine its own existing broadband and TV offerings with Sprint’s mobile phone operations. The proposed acquisition would allow the newly united company to compete with rivals like Verizon that are quickly expanding into new areas in search of revenue.
**Financing the acquisition**
!m[US Satellite TV Company Argues Its Offer Represents 13 Percent Premium to Softbank’s Bid](/uploads/story/1889/thumbs/pic1_inline.png)

Taking over Sprint would be a big bite for Dish, The Wall Street Journal pointed out. The wireless carrier reported $35.3 billion (₤23 billion) in sales last year, compared with $14.3 billion (₤9.3 billion) for Dish.
In its letter to Sprint’s board, Dish said it intends to finance the bid with $8.2 billion (₤5.3 billion) in cash from its balance sheet as well as debt financing. The company has hired Barclays Capital as financial adviser and has received a Highly Confident Letter from the investment bank, confirming Dish’s ability to raise the required financing.

“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,” Ergen wrote in the letter. The chairman added that he would have preferred holding confidential talks with Sprint about the acquisition proposal but the existing agreement with Softbank and the impending deadlines related to the Sprint Nextel shareholder vote prompted Dish to confirm its intentions publicly.
Bloomberg noted that Dish has accumulated a record $10 billion (₤6.52 billion) in cash, partly by selling bonds over the past year, which is giving Ergen’s $17 billion (₤11.1 billion) company enough firepower to expand into new sectors.
**Sprint Nextel’s share price was $7.20 as of 15.04.2013, 14.50 GMT.**
**Dish’s share price was $35.93 as of 15.04.2013, 14.50 GMT.**

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