Japanese Softbank Corp eyes huge Sprint takeover

TOKYO/NEW YORK - Reuters

A pedestrian uses her mobile phone in front of a Softbank phone shop in Tokyo on Oct 12. EPA photo

Japanese wireless service provider Softbank Corp is looking to buy about 70 percent of Sprint Nextel Corp in an aggressive move that would make it a major player in the U.S. mobile market.

Softbank’s ambitions may not stop with Sprint, which might be looking to buy out its partner, wireless service provider Clearwire Corp.

The Japanese company might use Sprint as a vehicle to make a run at smaller Sprint peer MetroPCS Communications Inc, a two-step transaction that would potentially cost more than 2 trillion yen ($25.55 billion), a Nikkei report said.

That would make the deal the biggest ever overseas acquisition by a Japanese company and vault Softbank into the upper echelons of wireless carriers worldwide.

Softbank and Sprint confirmed they are holding talks. While Sprint shares rose more than 14 percent, investors dumped Softbank shares in Tokyo on Friday, pushing the stock down as much as 17 percent to its lowest level in nearly five months.

 “How Softbank will finance this deal, what this means for management structure and its finances, that’s where the market is looking at right now,” said Mitsushige Akino, chief fund manager of Mitsuyoshi Asset Management.

Softbank is eyeing a controlling stake in Sprint worth more than 1 trillion yen ($12.8 billion) and is in talks with several banks on financing the bid, a source with direct knowledge of the matter said.
A second source, who would not speak on the matter publicly, said Softbank was seeking a stake of about 70 percent, which it could achieve by buying some newly issued shares directly from Sprint and tendering for the rest.

By raising new equity directly, Sprint would be able to shore up its balance sheet and potentially fund other deals, such as a buyout of Clearwire in which it already holds about 48 percent.

A major Sprint investor said any Softbank investment should be used to buy out the rest of Clearwire, to give Sprint attractive wireless spectrum assets and to speed up Clearwire’s upgrade of its wireless network with faster data speeds.