Some analysts speculated that Sprint Nextel Corporation would try to thwart the planned merger of T-Mobile USA and MetroPCS Communications Inc. by launching a hostile bid for MetroPCS. Instead, Sprint Nextel agreed to sell a 70 percent stake to Softbank Corp. for $20.1 billion, in what would be the largest foreign acquisition ever by a Japanese company. The announcement came on October 15, less than two weeks after U.S. cell phone rivals T-Mobile and MetroPCS signed their deal. Sprint Nextel’s 56 million subscribers make it the third-largest cell phone carrier in the United States after AT&T Inc. and Verizon Communications Inc. T-Mobile is fourth, MetroPCS sixth.
Softbank will buy $8 billion worth of shares directly from Sprint Nextel, which will use the cash to compete against its larger rivals. Softbank will also purchase another $12.1 billion in Sprint Nextel stockabout 55 percent of the target’s public floatin the open market at $7.30 per share. The rest will be converted into shares of a new publicly traded entity to be called New Sprint. The stock market valued Sprint Nextel at about $17 billion, or $5.70 a share, on the afternoon of October 15, a 13 percent premium to its closing price on October 11, the last trading day before news of a possible deal broke. The parties hope to close the deal by the middle of 2013 pending approvals from regulators and Sprint Nextel shareholders.
