SoftBank to pay $20.1B for 70% of Sprint

SoftBank Corp. (TSE: 9984) of Japan will acquire 70% of U.S. mobile operator Sprint Nextel Corp. (NYSE: S) for $20.1 billion, the two companies announced today. A series of agreements, when completed, will see $12.1 billion of the transaction total distributed to Sprint stockholders and $8.0 billion being added to Sprint’s balance sheet.

Approximately 55% of current Sprint shares will be exchanged for $7.30 per share in cash. The remaining shares will convert into shares of a new publicly traded entity, New Sprint. Sprint will survive as a wholly-owned subsidiary of New Sprint.

SoftBank is financing the transaction through a combination of cash on hand and a syndicated financing facility. The boards of both companies have approved the deal; final completion hinges on Sprint stockholder approval, customary regulatory approvals, and the satisfaction or waiver of other closing conditions. The companies expect the transaction to close in the middle of 2013.

SoftBank is a major player in the Japanese communications market, including the provision of mobile communications, broadband services, fixed-line telecommunications, and portal services.

SoftBank Chairman and CEO Masayoshi Son said, “This transaction provides an excellent opportunity for SoftBank to leverage its expertise in smartphones and next-generation high-speed networks, including LTE, to drive the mobile Internet revolution in one of the world’s largest markets. As we have proven in Japan, we have achieved a v-shaped earnings recovery in the acquired mobile business and grown dramatically by introducing differentiated products to an incumbent-led market. Our track record of innovation, combined with Sprint’s strong brand and local leadership, provides a constructive beginning toward creating a more competitive American wireless market.”

Added Sprint CEO Dan Hesse, “This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward. Our management team is excited to work with SoftBank to learn from their successful deployment of LTE in Japan as we build out our advanced LTE network, improve the customer experience and continue the turnaround of our operations.”

The companies say that Sprint is not required to take any actions involving Clearwire Corp. because of the transaction, other than those set forth in agreements Sprint has previously entered into with Clearwire and certain of its shareholders.