Dish Network (NASDAQ:DISH) was off about 2.5 percent on Monday. The satellite television broadcaster announced that it has submitted a merger proposal to Sprint Nextel (NYSE:S) worth $25.5 billion in cash and stock. Sprint was up as much as 14 percent on the news, hitting a 52-week high of $7.33 per share before closing at $7.06 per share.
“The DISH proposal clearly represents superior value to Sprint shareholders, including greater ownership in a combined company that is better positioned for the future with more spectrum, products, subscribers, financial scale and new opportunities,” the company said in a statement, cutting right to the heart of the issue. Dish’s offer stands in clear opposition to SoftBank’s proposal to buy 70 percent of the company for $20.1 billion.
“The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal,” said Charlie Ergen, chairman of DISH Network, in a statement. “Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly-enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal”…
Dish suggests that the merger will result in synergies and growth opportunities “estimated at $37 billion in net present value, including an estimated $11 billion in cost savings.”
If approved, the deal would create a company with as much as $44 billion in debt — the sum of the current load held by the companies plus about $9 billion that Dish would borrow to finance the merger. The combined entity would have 63.1 million retail subscribers and $50 billion in annual revenues. Dish is being advised by Barclays.
If the deal does go through, Sprint would owe SoftBank a $600 million breakup fee, which Dish has offered to pay.
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