DISH Network, America’s second-biggest television provider, yesterday offered to buy mobile phone giant Sprint Nextel for $25.5bn (£16.7bn) in cash and stock, a move that could thwart the proposed acquisition of Sprint by Japan’s SoftBank.
Sprint shares soared as much as 17.8 per cent after the announcement to their highest level since August 2008 and slightly topped the value of the Dish bid.
Dish’s surprise bid yesterday is the latest twist in a wave of consolidation in the US wireless industry. Dish had already made a counter-offer against Sprint for Clearwire, the wireless company majority-owned by Sprint.
It was also the boldest step yet by Dish chairman Charlie Ergen, who has bought billions of dollars worth of wireless spectrum in the last few years and has been seeking some sort of deal to make use of the airwaves.
“This is the culmination of a lot of years of work. Whether it be the purchase of spectrum, entering auctions, the acquisition of Sling Media, all those things come together now with the merger with Sprint,” Ergen said on a conference call with analysts and reporters.
Dish said it would pay $4.76 per share in cash and about 0.05953 shares in Dish stock for each Sprint share. The offer, which works out to $7 per share, represents a premium of roughly 12 per cent to Sprint’s close on Friday.
Sprint said it would evaluate the proposal but declined to comment further.
Analysts said the offer could spark a bidding war. “I wouldn’t be surprised if both parties revised their offers. The Dish bid strikes me as superior from an operational perspective because they operate a US business,” said RBC Capital Markets analyst Jonathan Atkin.
Sprint, the third-biggest US mobile services provider, agreed in October to sell 70 per cent of its shares to SoftBank for $20.1bn. That deal is currently being reviewed by regulators.