The Federal Communications Commission (FCC) has approved Sprint Nextel’s US$21.6bn sale to Japanese group Softbank and the US operator’s connected takeover of Clearwire Corporation.
Softbank expects to close the Sprint acquisition on Wednesday now…
The Federal Communications Commission (FCC) has approved Sprint Nextel’s US$21.6bn sale to Japanese group Softbank and the US operator’s connected takeover of Clearwire Corporation.
Softbank expects to close the Sprint acquisition on Wednesday now all regulatory hurdles have been cleared and the target’s shareholders have approved the deal.
Sprint said that 53% of its shareholders had agreed to receive cash, which will mean they receive US$5.65 in cash and 0.26174408 shares of “New Sprint” common stock, and 3% chose pure stock. According to the operator 44% of shareholders did not pick a preference, and so they automatically receive cash.
Meanwhile shareholders in Clearwire are set to vote on Sprint’s US$5.00 per share offer. The proposal has already received commitments from key shareholders which should mean today’s ballot is merely a formality.
The FCC’s acting chair Mignon Clyburn, holding the position until Tom Wheeler’s appointment is approved by the Senate, said the transactions “would serve the public interest”.
“The increased investment in Sprint’s and Clearwire’s networks is likely to accelerate deployment of mobile broadband services and enhance competition in the mobile marketplace,” she said.
Softbank won the key regulatory approval it needed at the end of May from the Committee on Foreign Investment in the US (CFIUS). The Japanese telco made commitments to not use equipment from certain vendors, believed to be China’s Huawei, and to allow a government-approved security director to join its board.
It also faced competition from Dish Network, which attempted to acquire Sprint through a cash-heavy offer, and difficulty from activist investors which wanted a higher ratio of cash to stock in Softbank’s offer. The Japanese group raised its offer in June to US$7.65 per share, comprising US$5.50 in cash and the rest in stock, which was enough to get shareholder approval later that month.
Sprint’s CEO Dan Hesse praised the FCC’s “thorough review” of the merger.
“Just two years ago, the wireless industry was at the doorstep of duopoly, but with these transformative transactions, we are one step closer to a stronger Sprint which will better serve consumers, challenge the market share leaders and drive innovation in the American economy” Hesse said.
Clearwire CEO Erik Prusch was also appreciative of the regulator’s decision saying it was “the right transaction at the right time to best deploy Clearwire’s spectrum”.
Meanwhile Softbank’s credit rating was downgraded two notches by Standard & Poor’s, which reasoned that the Sprint acquisition would change its risk profile from “intermediate” to “significant”.
