Sprint Nextel Corp. (S:US) is under increasing pressure to open up its books to Dish Network Corp. (DISH:US), which is arranging the financing it would need to outbid SoftBank Corp. (9984) with a $25.5 billion takeover offer.
Dish is already raising about $2.6 billion in a bond offering managed by Barclays Plc, Jefferies Group LLC, Macquarie Group Ltd. and Royal Bank of Canada. The satellite-TV company is also close to tapping the same banks for loans to help reach its goal of $9.3 billion in financing for the Sprint transaction, people familiar with the matter said yesterday.
Sprint hasn’t given Dish access to more detailed financial information, a key step in the merger process, in part because of concern over the satellite carrier’s ability to fund the proposal, people familiar with the discussions said this month. Dish Chairman Charlie Ergen said last week he would seek committed financing when it was the “last remaining obstacle to us getting access” to Sprint’s private financial data.
“If you listened to Charlie last week, you might conclude that things are going his way and this is the last step,” Shing Yin, an analyst at Guggenheim Securities LLC in New York, said in an interview. “But on the other hand, I’d be surprised if they were so far along that this was the last barrier. It seems too quick.”
Dish talked to Sprint about the financing this week and the two sides will continue meeting to discuss the offer, which compares with a $20.1 billion bid from SoftBank, said one of the people familiar with the matter yesterday. The people asked not to be named because the discussions are private.
The special committee of Sprint board members considering the deal hasn’t said that the satellite company’s offer is potentially superior to SoftBank’s, a move that would allow for more serious consideration of the bid.
Sprint agreed to a takeover in October by Tokyo-based SoftBank, which has its financing in place and offered to give the U.S. wireless carrier an $8 billion cash infusion as part of the deal. Dish stepped in with its counteroffer last month, seeking to expand into the mobile-phone business to offset a decline in satellite television.
Bill White, a spokesman for Overland Park, Kansas-based Sprint, declined to comment, as did Dish’s Bob Toevs, Barclays’s Brandon Ashcraft, Jefferies’s Richard Khaleel, Macquarie’s Paula Chirhart and RBC’s Gillian McArdle.
In addition to questioning Dish’s ability to finance the deal, Sprint’s directors also have doubts about estimates that the merged company would have $11 billion in cost savings, people familiar with the deliberations said this month.
Dish had already gained financing commitments from Jefferies, as well as Barclays, which is advising Dish and has provided a letter saying it’s confident it can help raise the necessary money, people with knowledge of the proceedings said earlier. Dish previously told Sprint it wouldn’t provide committed financing until it gained access to the carrier’s financial information, people familiar with the matter said.
Sprint shares were little changed in New York trading today, closing at $7.28. That puts them above the price offered by SoftBank or Dish, suggesting that investors are expecting a bidding war. Dish, based in Englewood, Colorado, fell 1.3 percent to $38.69.
The Financial Times previously reported on the financing deal with the four banks.
Separately, Dish filed a letter today with the Federal Communications Commission urging the agency to review SoftBank’s conduct with banks. Citing a Reuters story, Dish said SoftBank may have threatened potential sources of financing, saying that working with the satellite company would hurt their chances of participating in an initial public offering of Alibaba Group Holding Ltd., a Chinese e-commerce company.
“Dish has reportedly been the target of possible extortionate behavior on the part of SoftBank,” the company said in the letter. “SoftBank is trying to force its offer on Sprint’s shareholders by underhandedly seeking to undermine a superior bid.”
A SoftBank spokesman said “this is yet another irrelevant and unfounded filing based on unsubstantiated media reports.”
To contact the reporters on this story: Jodi Xu in New York at firstname.lastname@example.org; Jeffrey McCracken in New York at email@example.com
To contact the editors responsible for this story: Jeffrey McCracken at firstname.lastname@example.org; Nick Turner at email@example.com