Dish Network is marshalling its resources to fight for ownership of Sprint, as it seeks to tempt shareholders away from Softbank’s offer.
The satellite TV provider is arranging the financing it would need for its $25.5bn offer, and has already lined up four banks to support a $2.6bn bond offering (managed by Barclays, Jefferies Group, Macquarie Group and Royal Bank of Canada). It is also reported to be close to agreeing loans with the same quartet of banks, to get it closer to its goal of raising $9.3bn in financing for Sprint.
While there are some clear strategic benefits of a Dish merger, notably its TV content and customer base, the biggest sticking points have been the level of debt which the combined entity would take on, and indeed, convincing Sprint that its suitor can raise the required funds at all.
So far, Sprint has not given Dish access to detailed financial information, which would be an important step in a takeover process and a signal it was taking the offer seriously. However, it is now under pressure to open up its books, following comments by Dish chairman Charlie Ergen, that he would line up committed financing when it was the ‘last remaining obstacle to us getting access’ to Sprint’s private financial data. Dish had previously told Sprint it would not provide committed financing until it gained access to the detailed financial information.
However, analysts believe other hurdles remain. Shing Yin of Guggenheim Securities told Bloomberg: ‘If you listened to Charlie last week, you might conclude that things are going his way and this is the last step. I’d be surprised if they were so far along that this was the last barrier. It seems too quick.’ For instance, Sprint directors have also questioned Dish’s claims that its proposals would deliver $11bn in cost savings.
A special committee of Sprint board members is assessing the new offer, but has not yet said it is potentially superior to SoftBank’s $20.1bn bid for a 70% holding. The Japanese company has its financing in place and the deal includes an $8bn cash infusion to boost Sprint’s 4G roll-out.