- SoftBank looking at an offer of at least 50 percent in cash to form a company to buy Charter and Sprint.
- It's unclear what price SoftBank would offer for Charter shares or for the 20 percent of Sprint shares owned by the public for which it would also make an offer.
- SoftBank has lined up financing for the offer from three global banks and would be comfortable levering up the balance sheet, sources tell CNBC.
Despite what appears to be a distinct lack of interest from Charter Communications management in pursuing a deal, SoftBank continues to make efforts to acquire the giant cable company, according to people familiar with the situation.
Reports of SoftBank's interest in combining Sprint, which it controls, with Charter first surfaced late Friday, and Sunday night Charter released a statement that was intended to make it clear it has no interest in seeking a union.
That has not stopped SoftBank and its hard-charging founder Masayoshi Son from a quixotic attempt at cobbling together a buyout offer that has been described by those familiar with it as follows: SoftBank would contribute a sizable amount of equity to a new company, which would use that money and new debt financing to offer both Charter and Sprint shareholders a premium for their shares.
The offer would be at least 50 percent cash, with the remainder in shares of the new company. It's unclear what price SoftBank is contemplating offering for Charter shares or for the 20 percent of Sprint shares owned by the public for which it would also make an offer.
Sources tell CNBC that SoftBank has lined up financing for the offer from three global banks and would be comfortable levering up the balance sheet of the new company to between 5 and 6 times earnings before interest, taxes, depreciation and amortization.
Officials at SoftBank, Sprint and Charter declined to comment.
None of this means a deal is likely to happen. Charter's chief executive, Tom Rutledge, has a pay package that includes options that vest when the stock hits $564 a share, and he has indicated his belief that he will collect on those options within four years.
Charter shares closed up nearly 6 percent Monday, to $391.91.
It seems highly unlikely SoftBank could come near the $500 a share mark that would surely garner interest from many shareholders, including 27 percent holder Liberty Media and its chairman, John Malone. Liberty and the Newhouse family together control almost 50 percent of Charter's equity.
While Son may choose to make any proposal for Charter public in the next few weeks, he has no interest in pursuing a hostile deal to acquire Charter. If met with a rejection, he would likely move on.
Son is said to be intrigued by the possibility of using Sprint's 2.5 GHz wireless spectrum in conjunction with the cable infrastructure of Charter to speed the roll out of 5G wireless services nationwide. It is the prospect of 5G that also attracted Verizon to discuss the possibility of buying Charter in the last year, though the two could not agree on a price while Verizon also questioned just how beneficial Charter's infrastructure would be for a 5G build-out.
Finally, while Son may be showing strategic flexibility in pursuing a merger partner for Sprint, where he is chairman, his actions are also seen by some as having a hint of desperation given talks with his preferred merger partner, T-Mobile, have not advanced.
Shares of Sprint fell 2.9 percent, to close at $7.98, while shares of SoftBank fell 2.3 percent on Monday in Tokyo.