Dish Network makes $25.5B bid for Sprint

Sprint phones are displayed at a Best Buy

Sprint phones are displayed at a Best Buy in Mountain View, Calif. (July 17, 2012) (Credit: AP)

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Satellite TV company Dish Network made an unsolicited $25.5 billion offer for Sprint Nextel Corp. to challenge a bid by Japan's Softbank Corp. for the third-largest U.S. wireless carrier.

Dish, based in Colorado, said Monday that Sprint investors would get $7 a share, consisting of $4.76 in cash and stock representing about 32 percent of the combined company. That means the offer is $17.3 billion cash and $8.2 billion stock, and 13 percent more than Sprint's April 12 closing price. Sprint shares were up nearly 16 percent in early trading on Wall Street.

Dish, a satellite-TV provider with no mobile-phone customers of its own, is seeking an entry into the wireless business and already owns relevant spectrum. Dish owner Charles Ergen is trying to top Softbank, Japan's third-biggest mobile-phone operator, which in October agreed to pay Sprint $20 billion for a 70 percent stake as it seeks growth overseas.

Dish "ran up against the clock because you've got an offer from Softbank," said Vijay Jayant, an analyst at International Strategy & Investment Group. "It's the opportunity that given the current capital market environment you can get cheap capital for a good story."

Bill White, a spokesman for Kansas-based Sprint, declined to comment on Dish's proposal. Takeaki Nukii, a spokesman for Softbank, wasn't immediately available for comment.

CONSOLIDATION FRENZY

Dish's move is the latest twist in a frenzy of consolidation for the U.S. wireless industry. Smaller carriers are seeking out merger partners to help wage a stronger attack against the two dominant competitors, Verizon Communications Inc. and AT&T Inc.

Ergen, Dish's chairman, also informally approached Deutsche Telekom AG about a possible merger with the German company's T- Mobile division, people close to the situation said last week. Deutsche Telekom last week improved the terms of a proposal to combine T-Mobile with MetroPCS Communications Inc., a transaction that would unify the fourth- and fifth-largest U.S. wireless carriers.

CASH PILE

Dish and Sprint both held talks with MetroPCS before that company agreed to its merger with Deutsche Telekom's T-Mobile in October, people with knowledge of the discussions said last year.

For Ergen, the billionaire founder of Dish, the goal is to break into the wireless business -- part of a plan to decrease its reliance on the slowing satellite-TV market. Dish has accumulated a record $10 billion in cash, partly by selling bonds over the past year, giving it a war chest to expand into the new industry.

Ergen's $17 billion company now has the most money among U.S. television and phone providers, according to data compiled by Bloomberg. Barclays Plc is acting as financial adviser to Dish.

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