Fearing leaks, Japan's Softbank sprinted to close U.S. deal

Wed Oct 17, 2012 10:31am EDT
 
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By Nadia Damouni, Soyoung Kim and Mari Saito

NEW YORK/TOKYO (Reuters) - After months of secretive talks between "Starburst" and "Saturn" - codenames for Japanese telecoms firm Softbank and its U.S. target Sprint - fears that media leaks could scuttle Japan's biggest overseas buyout pushed negotiators into overdrive.

"All the dealmakers were in New York in the last two weeks," said a U.S. source familiar with the talks, which climaxed with Monday's announcement that Softbank Corp (9984.T: Quote) would pay $20 billion for control of Sprint Nextel Corp (S.N: Quote), giving the Japanese firm's billionaire CEO Masayoshi Son entry into the U.S. market and Sprint, the No.3 U.S. carrier, much needed cash.

"You get to a point where you're close enough to getting a deal done and we were really worried about leaks in the press, so we wanted to have the status of the deal ahead of the status of the leaks," said the source, one of several in New York and Tokyo interviewed by Reuters for this article.

Son, founder and one-fifth owner of the Japanese carrier, took the first concrete step towards the mega-deal when he met Sprint CEO Dan Hesse on a trip to California in late June, though brokers seem to have been shopping the U.S. firm for longer. Japan's No.2 carrier KDDI Corp (9433.T: Quote) said on Wednesday it was approached a year or so ago about buying Sprint, but declined to take part in talks.

Son, a rare risk-taker in conservative corporate Japan, says he began pondering some new bold move about two years ago, when he feared he had become mired in a defensive mode.

"I had set a management target of becoming debt free ... so I had bound myself by trying not to look at beautiful, wonderful things, like trying not to look at beautiful women. As a result, I felt I had become too defensive," the 55-year-old entrepreneur told Japanese TV after announcing the Sprint deal.

"I began to think, is it OK to end my life in such a mediocre fashion?" said Son, whose previous gambles include propelling Softbank, founded three decades ago as a software distributor, into the mobile business with the acquisition of Vodafone's (VOD.L: Quote) Japan unit for $15.5 billion in 2006.

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A jogger runs past a Softbank shop in Tokyo October 16, 2012. REUTERS/Kim Kyung-Hoon