SoftBank in Talks To Buy A Big Chunk of Sprint

Both SoftBank Corp. (TYO:9984) and Sprint Nextel Corporation (NYSE:S) have now confirmed that they are in talks for Softbank to buy a substantial (most reports say 70-75%) of Sprint. Right now it appears that SoftBank is trying to raise $23 billion in order to finance the deal.

The story was broken long before the U.S. market opened yesterday by a Japanese broadcaster and the Nihon Keizai Shimbun newspaper which published it on its website http://www.nikkei.com (http://e.nikkei.com/e/fr/freetop.aspx for English version). Although the story was unconfirmed and basically denied by SoftBank ( Per its website the story “….is based on speculation. We have not announced anything.”), it was pursued by heavyweights such as The Wall Street Journal, Reuters and Bloomberg.

The parties later in the day confirmed that they were “engaged in discussions”, but no agreements had been reached and that there were no assurances a deal would be reached or on what terms. Sprint did say in its press release that the deal could result in a change in control.

Overnight our time Nikkei.com reported that SoftBank is trying to borrow $23 billion to finance its purchase of Sprint and MetroPCS (NYSE:PCS). Meanwhile, U.S. media are reporting that Sprint is delaying its counterbid to Deutsche Telekom’s planned merger of its T-Mobile with MetroPCS.

The deal is expected to survive any antitrust reviews, as this is not a merger between two U.S. carriers – and if anything, strengthening #3 player Sprint could increase competition in the U.S. wireless market. But national security concerns could be an issue, particularly if the deal gets politicians excited. And of course the offer must be sweet enough to get shareholder approval.

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