Dish Network (NASDAQ: DISH) has formally given up all attempts to buy Sprint Nextel (NYSE:S), according to a regulatory filing, clearing the way for Japan's SoftBank to take control of Sprint and try to turn it into a more powerful force in the U.S. wireless market.
In a filing with the Securities and Exchange Commission, Dish said it "decided to abandon its efforts to acquire" Sprint, and, as a result, it will buy back $2.6 billion of bonds that it had issued in May to help fund its acquisition. Sprint shareholders are set to vote on SoftBank's $21.6 billion proposal to buy 78 percent of Sprint on June 25.
Dish said earlier this week it would not meet a deadline to formally enter in a new offer for Sprint, and would instead focus on acquiring Clearwire (NASDAQ:CLWR). However, Dish's plans for Clearwire are also in jeopardy following Sprint's new $5 per share offer to take control of Clearwire. Acquiring Clearwire and its spectrum has been key part of SoftBank's ultimate plans for Sprint.
"Dish abandoning plans to acquire Sprint tells you either they didn't see much value in the deal or just that they noticed SoftBank was in a much stronger position," Luis Benguerel, an equity trader at Interbrokers in Barcelona, told Bloomberg. "Dish may well follow AT&T (NYSE:T) now and look at Europe for acquisitions as prices are much cheaper there."
SoftBank CEO Masayoshi Son used the company's annual shareholder meeting in Tokyo to toast the company's position. "We were faced with extremely difficult problem, since Dish could conceivably disrupt our plans," Son said, according to the Wall Street Journal, commenting on the Clearwire board's decision to back Sprint's new offer. "Today is a good day."
Son downplayed the fact that Sprint's revised offer essentially will reduce by $3 billion the money it could spend to improve its network or buy spectrum. Analysts have said Sprint could face Dish again in a forthcoming auction of the 1900 MHz PCS H Block of spectrum that Sprint covets for its LTE network. According to Reuters, Son believes SoftBank's purchase of Sprint would allow it to achieve average annual savings of around $2 billion over the next four years.
- see this SEC filing
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this Reuters article
- see this separate WSJ article (sub. req.)
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