Sprint in talks on potential sale to Japan's Softbank

Thu Oct 11, 2012 9:19pm EDT
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By Taro Fuse and Sinead Carew

TOKYO/NEW YORK (Reuters) - Japanese wireless service provider Softbank Corp (9984.T: Quote) is looking to buy roughly 70 percent of Sprint Nextel Corp (S.N: Quote) in a bold move that would make it a major player in the U.S. mobile market.

But Softbank's ambitions may not stop with Sprint, which might also be looking to buy out its partner, Clearwire Corp CLWR.O. The Japanese company might also be aiming to use Sprint as a vehicle to make a run at smaller Sprint peer MetroPCS Communications Inc PCS.N, a two-step transaction that would potentially cost more than 2 trillion yen ($25.55 billion), according to a Nikkei report.

That would make it the biggest overseas acquisition by a Japanese company ever and vault Softbank into the upper echelons of wireless carriers worldwide.

In response to reports of a pending deal, Sprint said on Thursday that it was in talks with Softbank on a "potential substantial investment" that could involve a change in control of the U.S. company. It said there was no assurance of a sale.

Softbank is eyeing a controlling stake in Sprint worth more than 1 trillion yen ($12.8 billion) and is in talks with several banks to borrow money to finance a bid, according to a source with direct knowledge of the matter.

A second source familiar with the situation, who would not speak on the matter publicly, said Softbank was after a stake of roughly 70 percent, which it could achieve by buying some newly issued shares directly from Sprint and tendering for the rest.

By raising some new equity directly, Sprint would be able to shore up its balance sheet and potentially fund other deals such as a buyout of Clearwire in which it already holds roughly 48 percent.

Sprint shares rose as much as 19 percent on Thursday to levels not seen since the summer of 2011, on the heaviest trading volume in the stock's history. The stock ultimately closed 14.3 percent higher at $5.76 on New York Stock Exchange.   Continued...

People walk in front of a logo of Softbank Corp at its branch in Tokyo, in this file picture taken March 2, 2011. Japan's Softbank Corp said on October 12, 2012 that it is in talks with Sprint Nextel Corp about investing in the U.S. telecoms firm, but nothing has been decided. REUTERS/Toru Hanai/Files