The merger agreement between Sprint Nextel (S) and Japan's SoftBank has been amended to include an additional $4.5 billion in cash consideration to Sprint shareholders, bringing that total to $16.64 billion, Sprint announced last night.
The cash consideration under the new arrangement is equal to $5.50 a share, up from SoftBank's original offer of $4.02 per share, a 37% increase. The total price current Sprint shareholders will receive under the new arrangement will be raised from $7.30 a share to $7.65 a share, a 52% premium to Sprint's trading price prior to the original merger announcement in October 2012, the company said.
As a result of the Sprint board of directors' unanimously agreeing to the amended merger agreement with SoftBank, the Special Committee assigned by Sprint management to review a competing, $25.5 billion offer from DISH Network (DISH) has ended those negotiations. However, while Sprint does not expect a competitive offer from DISH, the new merger agreement with SoftBank does provide DISH with an opportunity to present its "best and final offer" by June 18.
In a brief statement issued last night, DISH said: "We continue to believe that Sprint has tremendous value. We will analyze the revised SoftBank bid as we consider our strategic options."
SoftBank Chairman and CEO Masayoshi Son was quoted in Sprint's press release as saying, "The amended agreement announced today delivers more upfront cash to Sprint stockholders, while still achieving our goal of creating a well-capitalized Sprint that is better positioned to bring meaningful competition to the US market."
Chairman of the Sprint Special Committee Larry Glasscock said, "As amended, the SoftBank transaction provides a significant cash premium, maximizes value and certainty for Sprint stockholders, and enhances Sprint's long-term value by creating a company with an improved balance sheet, greater financial flexibility and a stronger competitive position."
The SoftBank transaction is expected to close in early July, following a special meeting of Sprint stockholders, now scheduled for June 25 (originally planned for June 12), to allow shareholders time to review the proposed merger agreement. If approved, Sprint shareholders would end up owning approximately 22% of the "New Sprint," and SoftBank would own approximately 78% (compared to 70% in the previous offer).
-- Material from The Associated Press was used in this report.
