After a CNBC story all but confirmed that both sides had reached a deal comes official word from SoftBank and Sprint that a $20 billion acquisition has been reached. The deal is structured exactly as was reported yesterday with SoftBank paying $12.1 billion to Sprint shareholders and $8 billion in new capital.
The combined entity will create the world’s third-largest mobile phone services provider by revenue with the SoftBank group totaling 96 billion users at the completion of the transaction. Sprint’s current Chief Executive Officer Dan Hesse, one of the most vibrant execs in the wireless industry will keep his place as the head of Sprint after the deal.
“This could be the final and most important piece to reposition Sprint to compete effectively with AT&T and Verizon,” Walt Piecyk, an analyst with BTIG LLC in New York, said before the deal was announced.
The investment into Sprint by SoftBank is expected to allow the company to “fund a faster expansion of its 4G wireless network, pay down debt or make more acquisitions aimed at challenging bigger competitors Verizon Wireless and AT&T Inc.”
“It could not be a better time to get this investment of capital,” Sprint Chief Executive Officer Dan Hesse said during a press conference in Tokyo.
The deal is expected to close in mid-2013, subject to a meeting with Sprint shareholders, regulator approval as well as SoftBank securing financing. If the deal were to fall through, SoftBank will pay a $600 million dollar termination fee, likewise for Sprint if they back out of the deal, or $75 million if its Sprint shareholders don’t approve the deal.
When asked about the possibility that Sprint and SoftBank would make an immediate play for MetroPCS as well, Hesse refused to speculate on anything specific but said that the deal provided Sprint with a better industry position to work toward more consolidation in the future.