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Japan’s SoftBank to Acquire 70% Stake in Sprint Nextel (S)

Japan’s SoftBank Corp. today announced that it will acquire a 70% stake in Sprint Nextel Corp. (NYSE: S), the No. 3 U.S. wireless carrier, for $20.1 billion. The Wall Street Journal had last week reported that the two companies were in advanced talks for a deal. The deal comes a few days after the announcement of the T-Mobile/MetroPCS Communications Inc. (NYSE: PCS) merger.

The deal was announced by Masayoshi Son, who is SoftBank’s founder and CEO, and Dan Hesse, CEO of Sprint Nextel in Tokyo earlier today. The acquisition allows the Japanese mobile operator to enter into a growing U.S. market.

The deal provides Sprint with the resources it needs to make acquisitions and build out its 4G network.

Under the terms of the agreement, $12.1 billion will be distributed to Sprint stockholders. SoftBank will provide $8 billion of new capital to Sprint to strengthen the company’s balance sheet. The transaction will see 55% of existing Sprint shares exchanged for $7.30 per share in cash. The remaining Sprint shares will be converted into shares of a new publicly traded entity, New Sprint. On completion of the transaction, SoftBank will own 70% of Sprint.

SoftBank CEO Masayoshi Son said that the 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.

Sprint’s Dan Hesse described the transaction as transformative for the company. Hesse said that the transaction creates immediate value for its stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward. Hesse added that Sprint’s management team is excited to work with SoftBank to learn from their successful deployment of LTE in Japan as the company builds out its advanced LTE network, improve customer experience and continue the turnaround of its operations.



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