Dish Network Corp. (DISH:US), facing pressure to shore up its takeover bid for Sprint Nextel Corp. (S:US) after making a $25.5 billion unsolicited offer in April, said its existing bid is already a “formal proposal.”
“Dish submitted a formal proposal to merge with Sprint on April 15,” the satellite-TV provider said today in a statement. “Dish and Sprint continue to meet regularly and conduct the due diligence process that began in late May. In addition, Dish and Sprint continue to negotiate the terms of a merger agreement.”
Dish made its bid as a counteroffer to SoftBank Corp. (9984)’s $20.1 billion takeover agreement, which is slated for a shareholder vote on June 12. Sprint is considering delaying the decision so Dish can firm up its bid, people familiar with the deliberations said last week. Sprint was seeking a more binding offer from Dish, rather than the preliminary bid it made in April, including details on financing sources, the people said.
Scott Sloat, a spokesman for Overland Park, Kansas-based Sprint, declined to comment beyond a statement the company released on May 20: “The Sprint board of directors will, consistent with its fiduciary duties and in consultation with its financial and legal advisers, continue to evaluate the Dish proposal and discuss the proposal with Dish and SoftBank.”
Charlie Ergen, Dish’s billionaire chairman, is going after Sprint as part of his plan to expand into the wireless industry. He wants to pair his satellite-TV operations with the third-largest U.S. wireless carrier, letting him provide a bigger bundle of services. SoftBank, meanwhile, is counting on the deal to vault the Japanese company into the U.S. market.
Dish reiterated today that it believes its proposal is “both economically and strategically superior to that of SoftBank.”
Dish has lined up $9.3 billion in financing for the Sprint deal, people familiar with the matter said last month. Dish raised 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 company received separate loans from the same banks, as well as the Bank of Nova Scotia, the people said.
Sprint gave Englewood, Colorado-based Dish access to its private financial information last month after the financing was obtained.
While Dish’s bid price is higher, SoftBank has argued that the deal would burden Sprint with too much debt. Tokyo-based SoftBank also is offering to provide Sprint with an $8 billion cash infusion, helping the carrier complete additional deals, such as its planned acquisition of Clearwire Corp.
Institutional Shareholder Services Inc., the biggest shareholder-advisory firm, recommended SoftBank’s bid in a report last week, saying the deal would supply Sprint with the cash it needs to upgrade its network and compete with larger carriers. ISS said it couldn’t determine whether Dish’s offer was superior because it hasn’t been presented to investors.
Sprint shares fell 0.8 percent to $7.18 at the close in New York. The stock has climbed (S:US) 27 percent this year, signaling that investors expect a bidding war for Sprint to continue.
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