Dish Network Makes $25.5 Billion Bid for Wireless Company Sprint

3:40 AM PST 04/15/2013 by Georg Szalai
Alex Wong/Getty Images

UPDATED: The satellite TV giant, led by chairman Charlie Ergen, is looking to acquire the third-largest U.S. wireless firm to provide "rich content everywhere, all the time."

Dish Network said early Monday that it has submitted a $25.5 billion takeover bid for wireless giant Sprint Nextel.

The price tag of the unsolicited bid would trump an offer for Sprint that Japan's Softbank previously made.

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"The Dish proposal clearly represents superior value to Sprint shareholders, including greater ownership in a combined company that is better positioned for the future with more spectrum, products, subscribers, financial scale and new opportunities," said Dish, led by chairman Charlie Ergen, the subject of a recent Hollywood Reporter profile.

The Sprint bid comes after Dish has in recent years acquired wireless spectrum and has been looking for ways to use it. Meanwhile, the wireless industry has been consolidating. For example. Deutsche Telekom's T-Mobile USA and MetroPCS have agreed to combine.

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Earlier this year, Dish also made an informal offer to buy wireless firm Clearwire, which is half-owned by Sprint and that has agreed to sell Sprint the other half. Dish has yet to make a formal bid though. "Though not a condition of our [Sprint] proposal, we anticipate that the pending transaction with Clearwire would be completed," Dish said Monday.

Dish's offer for Sprint consists of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7 per share, based upon Dish's closing price on Friday, including $4.76 per share in cash and 0.05953 Dish shares per Sprint share. The cash portion of Dish's bid represents an 18 percent premium over the $4.03 per share offered by SoftBank, Dish said. The stock portion represents approximately a 32 percent ownership for Sprint shareholders in the combined company, compared with SoftBank's proposal of a 30 percent stake. 

Overall, "this represents a 13 percent premium to the value of the existing SoftBank proposal," Dish said.

"The Dish proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal," said Ergen. "A transformative Dish/Sprint merger will create the only company that can offer customers a convenient, fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services."

Added Ergen: Additionally, the combined national footprints and scale will allow Dish/Sprint to bring improved broadband services to millions of homes with inferior or no access to competitive broadband services. This unique, combined company will have a leadership position in video, data and voice and the necessary broadband spectrum to provide customers with rich content everywhere, all the time."

Dish estimated that the proposed combination will result in synergies and growth opportunities of around $37 billion, including an estimated $11 billion in cost savings.

Sprint and Softbank didn't immediately comment on the Dish bid. Softbank's takeover offer came with a $600 million break-up fee that Dish would have to pay.

Sprint recorded $35.3 billion in revenue in 2012, compared with Dish's $14.3 billion.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai
 

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