Dish, SoftBank poised for bidding war over Sprint

Dish Network's (NASDAQ: DISH) surprise $25.5 billion bid for Sprint Nextel (NYSE:S) may spark a bidding war between Dish and Japan's SoftBank over the United States' third-largest wireless carrier, according to comments from shareholders and investment analysts. Further, the situation likely won't get straightened out anytime soon, given the difficulty of comparing the two complex transactions.

For its part, SoftBank said Dish's bid for Sprint won't derail SoftBank's plans to acquire 70 percent of Sprint for $20.1 billion.

"SoftBank believes that the agreed terms of our transaction with Sprint offer Sprint shareholders superior short and long term benefits to Dish's highly conditional preliminary proposal," SoftBank said on its website. "The SoftBank-Sprint transaction is in the advanced stages of receiving the necessary approvals, and we expect to consummate the transaction on July 1, 2013 with the terms already agreed."

Analysts agreed that SoftBank founder Masayoshi Son is a rare risk-taker in an otherwise staid Japanese business market, and he likely will fight back against Dish Chairman Charlie Ergen's bid for Sprint.

"The issue for Son is that he wants to build a global company, he promised to do that. This is probably the one shot he has of doing that, and I don't think he's going to walk away," Neil Juggins, a Hong Kong-based analyst at JI Asia, an affiliate of Societe Generale, told Reuters.

"SoftBank is keen on buying Sprint and will probably raise its offer if the rival bidder doesn't back down," Mitsushige Akino, head fund manager at Ichiyoshi Investment Management Co. in Tokyo, told Bloomberg.

However, SoftBank investors are concerned that will mean the company will need to raise more money to increase its bid for Sprint. SoftBank's stock suffered its biggest decline since October after Dish announced its bid for Sprint yesterday. Further, the falling value of Japan's yen could complicate SoftBank's attempts to counter Dish.

Interestingly, SoftBank could potentially make as much as $4 billion if its deal with Sprint collapses. As the Wall Street Journal pointed out, SoftBank would receive $600 million if Sprint ultimately rejects its offer, which combined with SoftBank's convertible bond and the remaining money it owes Sprint shareholders could net SoftBank a windfall if its deal with Sprint falls apart.

For its part, Dish argued that its offer is worth 13 percent more than SoftBank's offer, and Dish said its transaction would leave Sprint stockholders with 32 percent of the combined Dish and Sprint, while SoftBank's offer would only leave Sprint stockholders with 30 percent of the resulting company.

And, in an interview with the Wall Street Journal, Ergen said Dish will use Sprint to deliver mobile video services that would upend the market for wireless and TV. He also said the company could provide advanced advertising products since it could track users' behavior both in their homes and while they're out and about. "We can offer a much, much more compelling product that differentiates away from things like data caps and bits and bytes," Ergen told WSJ.

Sprint yesterday said it will evaluate Dish's bid and declined to comment further.

Sprint will have a difficult time assessing the two deals, noted WSJ columnist Ronald Barusch. On one hand, SoftBank's offer represents a cash infusion that would likely allow Sprint's management to largely retain the company's corporate structure. Dish's bid, on the other hand, would ultimately mean a merging of Dish and Sprint's management, which might cause concern among Sprint's middle management, customer service and other departments.

"At the very least, the Sprint executives will be required to execute Dish's transformative business plan," Barusch wrote.

Further, Sprint's shareholders will have to decide whether SoftBank's cash infusion is ultimately more valuable than Dish's promise to leverage Sprint in a market evolution. And Dish isn't the first TV operator to harbor wireless ambitions that include Sprint: Pivot was the now-failed joint venture among Sprint and cable companies Comcast, Time Warner, Cable, Cox Communications and Brighthouse Networks. The effort too was intended to use wireless to deliver mobile video programming. Pivot collapse due to lack of consumer interest.

For more:
- see this AllThingsD article
- see these four WSJ articles (sub. req.)
- see these two Reuters articles
- see this Bloomberg article

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Dish makes $25.5B offer to buy Sprint, countering Softbank
Dish amasses $10B cash pile as questions swirl over its plans
Report: Worries about Chinese vendors weigh on Sprint/Softbank deal
FCC's Genachowski says review of Sprint/Softbank deal is on track
Clearwire shareholder Crest puts up more resistance to Sprint deal

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