SoftBank Confirms Acquisition of Sprint for $20.1B
In a document released today by Japanese company SoftBank, it has confirmed the acquisition of Sprint to create a company it is calling New Sprint. The acquisition will provide Softbank with a 70% controlling interest in New Sprint, and will keep the current Sprint CEO Dan Hesse in the top position.
The acquisition which will create “one of the largest mobile internet companies in the world”, through a combined subscriber base and current business will see some hefty payouts to either side if the deal fails.
Sprint is to pay SoftBank $600M if it accepts a bid from a third party and terminates the SoftBank deal, where SoftBank is to pay Sprint $600M if the merger fails due to a financing issue on SoftBank’s side. SoftBank has also written in that Sprint will owe SoftBank $75M for expenses if the acquisition is not approved by the Sprint board.
These potential hefty fines may keep other interested parties from jumping in. Sprint had been previously looking at acquiring MetroPCS but news of others looking at Sprint is not as apparent.
The merger may breathe some new life into the carrier, as initial plans are to infuse $3B to help with the build out of a nationwide LTE network.
Sprint CEO, Dan Hesse said, “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 real winners here may be the current subscribers. With the plans to build out the network and the infusion of capital, the company will be on track to give the big two Verizon and AT&T a run for their money. If New Sprint keeps to the unlimited approach, it can surely differentiate itself from its competition. The question will be coverage and how quickly they can gain it.