Japan's Softbank in talks to invest in Sprint

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Japanese cellphone company Softbank Corp. was in talks Thursday about taking a substantial ownership stake in struggling U.S. carrier Sprint Nextel Corp.

Sprint, the third-largest cellphone company in the United States, said the deal could be big enough to involve a "change of control" of the company. It didn't provide any other details.

The news sent Sprint shares as high as $6.04, the highest level since 2008. The shares closed at $5.76, up 14.29 percent.

The Wall Street Journal, citing an unidentified person with knowledge of the talks, put the value of the transaction at more than $12.8 billion.

Analysts expressed surprise at news of the talks. The U.S. wireless industry is rife with speculation about mergers, as smaller players find themselves struggling to compete, but the injection of a possible foreign investor clouds the picture.

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Sprint, which is based in Overland Park, Kan., is in a difficult competitive position. It has 56 million wireless subscribers, making it about half the size of market leader Verizon Wireless, and it keeps losing high-paying subscribers to Verizon and AT&T, the industry's No. 2 player.

Sprint has $21 billion in long-term debt, has embarked on a costly network restructuring and signed a long-term contract to buy $15.5 billion worth of iPhones from Apple over four years. Investor concerns over Sprint's financial health have eased this year, however, and the stock has more than doubled since January.

The company had a market capitalization of $15 billion at Wednesday's close, implying that Softbank's reported $12.8 billion bid wouldn't be enough to buy the entire company.

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