For Mr. Ergen, the billionaire founder of Dish, the goal is to break into the wireless business -- part of a plan to decrease its reliance on the slowing satellite-TV market. Dish's move is also the latest twist in a frenzy of consolidation for the U.S. wireless industry. Smaller carriers are seeking out merger partners to help wage a stronger attack against the two dominant competitors, Verizon Communications and AT&T.
Sprint investors would get $7 a share, consisting of $4.76 in cash and stock representing about 32% of the combined company, Englewood, Colorado-based Dish said today. That means the offer is $17.3 billion cash and $8.2 billion stock, and 13% more than Sprint's April 12 closing price. Sprint rose as high as $7.24 in early U.S. trading.
Dish, a satellite-TV provider with no mobile-phone customers of its own, is seeking an entry into the wireless business and already owns relevant spectrum. Mr. Ergen is trying to top Softbank, Japan's third-biggest mobile-phone operator, which in October agreed to pay Sprint $20 billion for a 70% stake as it seeks growth overseas.
Dish "ran up against the clock because you've got an offer from Softbank," said Vijay Jayant, an analyst at International Strategy & Investment Group. "It's the opportunity that given the current capital market environment you can get cheap capital for a good story."
Shares of Sprint exceeding Dish's offer in early trading signals that investors project higher bids are yet to come. The shares closed at $6.22 in New York on April 12. Dish shares rose 2.7% to $37.63 on April 12.
Bill White, a spokesman for Sprint, declined to comment on Dish's proposal. Takeaki Nukii, a spokesman for Softbank, wasn't immediately available for comment.
Mr. Ergen, Dish's chairman, also informally approached Deutsche Telekom about a possible merger with the German company's T- Mobile division, people close to the situation said last week.
Deutsche Telekom last week improved the terms of a proposal to combine T-Mobile with MetroPCS Communications Inc., a transaction that would unify the fourth- and fifth-largest U.S. wireless carriers. Dish and Sprint had both held talks with MetroPCS before that company agreed to its T-Mobile merger in October, people with knowledge of the discussions said last year.
Dish has accumulated a record $10 billion in cash, partly by selling bonds over the past year, giving it a war chest to expand into the new industry. Mr. Ergen's $17 billion company now has the most money among U.S. TV and phone providers, according to data compiled by Bloomberg.
~ Bloomberg News~