News Hour: Softbank to buy 70 per cent of Sprint Nextel Corp for $20 billion: Report

Japanese mobile operator Softbank Corp said it will buy about 70 percent of Sprint Nextel Corp, the third-largest US carrier, for $20.1 billion - the most a Japanese firm has spent on an overseas acquisition.

The deal, announced by Softbank's billionaire founder and chief Masayoshi Son and Sprint CEO Dan Hesse at a packed news conference in Tokyo on Monday, gives Softbank an entry into a U.S. market that still shows growth, while Japan's market is stagnating. It also gives Sprint the firepower to buy peers and build out its 4G network to compete better in a market dominated by AT&T and Verizon Wireless.

Analysts have long said the U.S. telecoms industry needs consolidation, but few looked to Japan as a catalyst. Some investors worry Softbank is biting off more than it can chew.

But the 55-year-old Son, a rare risk-taker in Japan's often cautious business circles, is betting U.S. growth can offer relief from cut-throat competition in Japan's saturated mobile market. Combined, Softbank and Sprint will have 96 million users.

"It could be safe if you do nothing, and our challenge in the U.S. is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built," he told the news conference.

"But not taking this challenge will be a bigger risk."

FIRE-POWER

Softbank said that as part of the deal it would buy $3.1 billion of bonds convertible into Sprint stock at $5.25 a share, while about 55 percent of existing Sprint shares would be exchanged for $7.30 per share in cash, with the transactions to be completed by mid-2013. Sprint shares closed Friday at $5.73.

Hesse, who will stay on as Sprint CEO, said the Softbank investment would give Sprint opportunities it hadn't had since he joined the firm in late-2007, and enable the U.S. firm to play a bigger role in future market consolidation.

"This is pro-competitive and pro-consumer in the U.S. because it creates a stronger No. 3 ... it competes with the duopoly of AT&T and Verizon. When you look at what Softbank has accomplished in Japan with the No. 3 carrier, it's something we can learn from," he said.
(Source: economictimes.indiatimes.com)