BREAKING NEWS FROM CNBC'S DAVID FABER: SOFTBANK TO BUY 70 PERCENT STAKE IN SPRINT: SOURCE
Softbank to Buy 70 Percent Stake in Sprint: Source
| CNBC Anchor and Reporter
CNBC.com | 14 Oct 2012 | 06:06 PM ET
Softbank and Sprint have reached a deal under which Softbank will pay $20 billion for a 70 percent stake in the wireless telecom operator, according to people close to the situation.
The deal is expected to be announced tomorrow morning. While certain details are still being worked out, the boards of both companies have agreed in principle to the deal and are expected to officially ratify it this evening.
The transaction calls for Softbank to buy $8 billion worth of shares directly from Sprint at a price of $5.25 each and tender for another $12 billion worth of the shares from existing holders at a price of $7.30 a share, a large premium to Sprint's current price. Given the deal's structure, it will not require a shareholder vote.
The equity being purchased directly by Softbank includes a $3 billion convertible bond purchase that is exercisable at $5.25 and will be sold well before the deal closes, in order to provide funds for Sprint as it moves to deal with certain debt maturities at the parent and at the 48 percent owned Clearwire.
While a Sprint purchase of Clearwire will not be announced tomorrow, sources familiar with the situation tell me Sprint is working on that deal and needs to insure the governance for Clearwire is in its control prior to closing the Softbank transaction.
The remaining $5 billion in primary equity being purchased by Softbank will also be bought at $5.25 a share, said people familiar with the talks.
The purchase is a huge one for Softbank, which is essentially making a $20 billion gamble that it success in developing LTE wireless services in its home market of Japan can be translated to the U.S. Sprint, while the third largest wireless provider in the U.S., significantly trails the two market leaders, Verizon and AT&T .
Softbank's hope, say people familiar with its strategy, is to build on Sprint's spectrum position, while hoping the company can further consolidate the wireless industry through acquisitions of more spectrum and other operators. The parties hope to close the deal within six months.
© 2012 CNBC.com
About CNBC: With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD , CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to more than 395 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 16 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide.
CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms. These include CNBC.com, the online destination for global business; CNBC PRO, the premium, integrated desktop/mobile service that provides real-time global market data and live access to CNBC global programming; and a suite of CNBC Mobile products including the CNBC Real-Time iPhone and iPad Apps.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/