Dish Network's (NASDAQ: DISH) $25.5 billion bid for Sprint Nextel (NYSE:S) has drawn support now from two major Sprint investors who view it as a compelling alternative to Japanese operator SoftBank's plan to take control of 70 percent of Sprint for $20.1 billion.
Investor Omega Advisors has joined billionaire John Paulson in praising Dish's offer, which caught the wireless world by surprise Monday morning. "We like the Dish offer and think it is superior to SoftBank," Omega CEO Leon Cooperman said in an email to Bloomberg. Omega has a 1.9 percent stake in Sprint, according to data compiled by Bloomberg.
Under Dish's proposed offer, Sprint shareholders would receive $7 a share, consisting of $4.76 in cash and stock representing about 32 percent of the combined company, vs. 30 percent under the SoftBank deal, according to Dish. That equates to $17.3 billion cash and $8.2 billion stock, according to Bloomberg. Dish said the total offer represents a 13 percent premium on the SoftBank deal, which Sprint and SoftBank announced in October.
Dish "is contributing valuable spectrum, 14 million subscribers, cost synergies and revenue synergies," Paulson said Tuesday in a statement. "Dish needs to firm up the financing, but it's a compelling offer."
For its part, SoftBank said Dish's bid for Sprint won't derail its plans. "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, adding that it continues to expect its deal with Sprint to close by July 1.
Sprint said on Monday its board will evaluate Dish's bid and declined to comment further.
"Dish and SoftBank are both successful companies with great track records led by strong leaders," Paulson said. "[Dish Chairman Charlie] Ergen seems fully committed. It will be interesting to see how the Sprint board and SoftBank respond."
Dish's proposal may spark a bidding war between Dish and SoftBank over the United States' third-largest wireless carrier, according to comments from shareholders and investment analysts.
The deal also scrambles the wireless M&A picture, and may create complications for other industry players, including Clearwire (NASDAQ:CLWR) and T-Mobile USA. Dish has not formally withdrawn its offer to Clearwire, which Sprint is in the process of trying to acquire control of. However, according to a Wall Street Journal report, which cited unnamed sources familiar with the matter, Dish stopped having meaningful communications with Clearwire a couple of months ago. Dish has said its offer to Sprint is not contingent on Clearwire accepting Sprint's offer.
Further, the Journal reported that Ergen has had informal talks with T-Mobile parent Deutsche Telekom in recent months. However, if Dish's bid for Sprint is successful, any future combination with T-Mobile is much less likely and necessary.
- see this Bloomberg article
- see this WSJ article (sub. req.)
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