Dish Network, the No. 2 U.S. satellite television provider, offered to buy Sprint Nextel for $25.5 billion in cash and stock, a move that could thwart the proposed acquisition of Sprint by Japan's SoftBank.
Dish's bid is the latest development in a shakeup of the U.S. wireless business, which is undergoing a wave of consolidation. Dish was already in the midst of an unsolicited offer for Clearwire, the wireless company majority owned by Sprint.
Dish said on Monday 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 $7.00 per share, represents a premium of roughly 12 percent to Sprint's close on Friday.
Dish claimed its offer represented a premium of roughly 13 percent to SoftBank's existing bid. Sprint shareholders would own 32 percent of the combined company.
"The offer from Dish appears credible since it has the financing lined up and can justify a higher price than SoftBank's offer because of the synergies with its existing operations in the U.S.," said Nick Brown, a telecoms analyst with Espirito Santo investment bank.
Sprint, the No. 3 U.S. mobile services provider, agreed in October to sell 70 percent of its shares to SoftBank for $20 billion. Neither Sprint nor SoftBank could be reached immediately for comment on Dish's bid.
"Though not a condition of our proposal, we anticipate that the pending transaction with Clearwire would be completed," Dish Chairman Charlie Ergen said in a statement.
Sprint shares were up sharply before the bell, just above the offer price. (Click here to track Sprint stock following the news.)
Barclays is serving as financial adviser to Dish. The satellite company said it intended to fund the bid with $8.2 billion in cash from its balance sheet as well as debt financing.
In its letter to Sprint's board, Dish said it had received a "highly confident letter" from Barclays with regard to its financing.