Advisory Firm: Approving Sprint Sale to Softbank “Unwise”
In the latest development in Softbank’s attempt to buy Sprint (NYSE:S), a shareholder advisory firm has flipped its position and is recommending against the offer, forcing a second look at Dish’s (NASDAQ:DISH) competing bid. Amid accusations its bid is nothing more than a ploy to pick up network access, Dish might be called on to make good on its $25 billion offer.
Softbank’s bid of $20.1 billion for 70 percent of Sprint was approved last week by Egan-Jones Ratings Co, a firm that attempts to get shareholders the best deal in a takeover. However, Bloomberg reported Egan-Jones noted on Friday that it believes Softbank will have to bid higher. As a result, they called accepting the deal “unwise” and recommended waiting for a better offer.
Softbank has been adamant in its refusal to budge on what it considers a superior offer to the one from Dish. Meanwhile, pressure from several prominent U.S. senators has made the decision more complicated, as Dish lobbyists continue to raise questions about national security with respect to a Japanese company that relies on Chinese technology. Softbank reps, who called the Dish campaign rhetoric “xenophobic,” have pledged to replace all Chinese-made equipment if the deal goes through.
Sprint, the third-largest network carrier in the U.S., would likely challenge Verizon (NYSE:VZ) and AT&T (NYSE:T) for their spots at the top of the industry with more cash and a different marketing approach. Softbank expected to be the company in charge, yet the advisory firm’s new position indicates it believes more money is going to come onto the table.
Disgraced telecom expert Jack Grubman was on “Squawk Box” on Friday and told hosts of the CNBC show he believed Dish founder Charles Ergen was not in fact trying to purchase Sprint, but rather was out to land a network access deal from the company. The momentum may now be on Dish’s side, but Sprint is clearly not out of the picture yet.
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