Sprint shareholders approve SoftBank's $21.6B offer

Sprint Nextel (NYSE:S) shareholders overwhelmingly approved Japanese operator SoftBank's offer to acquire 78 percent of Sprint in a $21.6 billion deal, handing SoftBank and its CEO Masayoshi Son a major victory in SoftBank's quest to outbid Charlie Ergen's Dish Network (NASDAQ: DISH).

Sprint said 98 percent of the votes cast at today's special shareholders meeting voted in favor of the merger agreement with SoftBank, representing around 80 percent of Sprint's outstanding common stock as of April 18.The FCC still needs to approve the deal, but Sprint and Softbank said they expect the deal to formally close in early July.

Earlier this month SoftBank revised its original proposal to counter Dish's $25.5 billion counterbid. Dish subsequently abandoned its attempt to get Sprint.

Under the revised deal with SoftBank, Sprint shareholders will get more money and Sprint will get less cash than originally proposed. Sprint shareholders will be paid $5.50 per share instead of $4.02 under the old agreement. SoftBank will get shares from existing Sprint investors for $7.65 per share, up from the previous offer of $7.30.

At bottom, SoftBank will give Sprint shareholders $16.6 billion in cash and put $5 billion of new capital into Sprint for a 78 percent stake. Under the old deal, SoftBank would have given shareholders $12.1 billion in cash and pumped $8 billion in capital into Sprint for a 70 percent stake.

Son hopes to use Sprint to compete against Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T), which each have nearly twice as many customers as Sprint. Having three strong competitors will change the market, Son argues. "That will stimulate the whole industry in terms of both innovation, the prices, services, everything," he said in an interview last month with the Wall Street Journal.

Son has indicated Sprint will maintain its unlimited smartphone data pricing, but also hinted more changes could come. "I'm not trying to say just a straight simple price discount," he said. "There are all kinds of ways to excite the people with segmentation, with packaging or new campaigns or introduction of new innovative service or innovative products."

Also central to Son's strategy is Sprint's bid to acquire the rest of Clearwire (NASDAQ:CLWR) it does not already own. Dish has offered $4.40 per share for Clearwire, but Sprint recently increased its bid for Clearwire to $5 per share, and has since received support from Clearwire's board and minority shareholders. At stake is Clearwire's trove of 2.5 GHz spectrum, which Sprint hopes to use for a TD-LTE offload network. Clearwire commands around 160 MHz of spectrum in the top 100 markets, and Sprint has said its Network Vision network architecture allows it to efficiently deploy TD-LTE on the airwaves.

For more:
- see this release
- see this WSJ article (sub. req.)

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