DISH Network announced a $25.5 billion offer to acquire Sprint Nextel — a deal they say is a 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.
The DISH offer consists 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.
DISH currently has about 14 million satellite TV subscribers.
“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.”
“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,” added Ergen.
In a conference call with investors, DISH said a merger with Sprint presents a unique opportunity to build a highly efficient, multimode network for video delivery. This would use satellites and 700 MHz terrestrial for broadcast to homes and mobile users, combined with LTE for unicast traffic.
DISH also cited significant CAPEX/OPEX synergies in merging operations, estimated at $37 billion over several years.
DISH said it anticipates that Sprint’s pending transaction with Clearwire would be completed, although that is not a condition of its offer.
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In December 2012, Sprint agreed to pay $2.97 per share for remaining shares of Clearwire that it does not already own. The deal, has been accepted by Clearwire’s Board of Directors, equates to a total payment of $2.2 billion for the outstanding 50% equity stake, and results in a total Clearwire enterprise value of approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion.
Sprint said its Network Vision architecture will be able to take full advantage of Clearwire’s complementary 2.5 GHz spectrum assets, while achieving operational efficiencies and improved service for customers as the spectrum and network is migrated to LTE standards.
Clearwire holds the largest spectrum portfolio in the U.S. but in upper bands. Its spectrum is an average 163 MHz in the top 100 U.S. markets.
In October 2012, SoftBank announced plans to 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.
