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Dish Network Offers to Buy Sprint Nextel in a Deal worth $25.5 Billion (DISH, S)

U.S.’s second largest satellite television provider, Dish Network Corp. (NASDAQ: DISH), offered to acquire Sprint Nextel Corp. (NYSE: S) for $25.5 billion both in cash and stock, a move which could prevent Japan’s Softbank’s bid to buy partial stake in the nation’s third largest wireless carrier.

Dish Network has informally offered $7 a share ($4.76 in cash and $2.24 in stock), which it says represents 13% premium over  Japan’s Softbank’s complicated  offer to buy 70% stake in Sprint for $20.1 billion.

The Overland Park, Kansas-based Sprint Nextel, agreed to sell 70% of its stake to Softbank, last October.

The Englewood Colorado-based Dish Network, which is said to be advised by Barclays, is confident to generate the required funding. The Company said that it will fund the deal with $8.2 billion cash-in-hand and rest from debt financing.

Sprint’s acquisition would be huge deal for Dish Network. While Dish’s revenue stood at $14.3 billion, Sprint posted revenue of $35.3 million in the last fiscal. According to CapitalIQ, should the deal materialize the merged entity would have $36 billion in debt excluding the amount which Dish said it would borrow to finance the deal.

The informal offer to buy Sprint comes just after Dish Network made an informal offer to buy Clearwire Corp. (NASDAQ: CLWR). Currently, Sprint has 50% stake in Clearwire and soon it will buy rest of the stake as well.

Sprint’s board will now have to decide whether Dish Network’s offer is superior compared to Softbank’s proposal. In case, the board thinks that former’s bid is better than the latter’s then Softbank might be forced to sweeten the deal.

Commenting over Dish Network’s offer, Nick Brown, a telecom sector analyst with Espirito Santo investment bank, said  “The offer from Dish appears credible since it has the financing lined up and can justify a higher price than SoftBank’s offer because of the synergies with its existing operations in the U.S.,” according to CNBC.


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