(Update: Confirmed) Report: SoftBank To Buy 70 Percent Stake In Sprint Nextel Corp

Update: SoftBank, Sprint held a press conference early this morning to officially announce the acquisition. 

With reports surfacing right before the end of the week that Japan’s third largest wireless provider was interested in purchasing a controlling share in Sprint Nextel Corp, comes reports that a deal has been reached between the two companies. A CNBC report says that a deal is expected to be announced as early as tomorrow morning, and though there are still some details that will remain up in the air, the companies have agreed to terms in principle.

The transaction will call for SoftBank to buy $8 billion shares of Sprint and buy another $12 billion worth of shares from existing holders at a price of $7.30 a share. Given the structure of the deal, it will not require a shareholder vote. The deal also includes a $3 billion convertible bond purchase that is exercisable at $5.25 a share and will be sold before the deal closes to provide Sprint with funds.

The deal itself is a huge undertaking for SoftBank as they make what amounts to a $20 billion gamble, hoping the use of Sprint’s spectrum position and further industry consolidation will boost the company’s margins. The two companies hope to close the deal within six months.

There are some reasons we’re particularly interested in this deal on TmoNews and T-Mobile fans should be paying attention as well. For one, this deal is likely to cut Sprint as a potential bidding competitor for MetroPCS. It also eliminates the chances that had Sprint ultimately decided not to bid or lost a bidding war, that it would oppose the deal with regulators. One of the “outside” reasons we’re keeping a sharp eye on Sprint’s workings with SoftBank is that some speculate SoftBank is gobbling up Sprint with the hopes of picking up more US wireless carriers in the future (even as the FCC says they want four national carriers), which could include a T-Mobile acquisition making a true third competitor to AT&T and Verizon. It may seem like a long-shot, but a number of analysts who say the potential for such a transaction is there, even if it takes years to carry out. Food for thought at least.


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