Dish still eyeing Sprint books days ahead of vote

Reuters News
Posted: Jun 10, 2013 6:10 PM

(Reuters) - Dish Network Corp said it was still examining Sprint Nextel Corp's books just two days before shareholders were due to vote on rival bidder SoftBank Corp's proposed $20.1 billion purchase of 70 percent of Sprint.

Sprint shareholders were due to vote on Wednesday June 12 on the SoftBank deal, which Sprint accepted in October 2012.

But satellite TV provider Dish, which made a $25.5 billion counter offer for Sprint in April, said on Monday that it was still in the process of negotiating the terms of an agreement of its own with Sprint, the No. 3 U.S. mobile provider.

Dish, whose chairman Charlie Ergen is looking to expand into the wireless market, has been involved in a due diligence process with Sprint for a few weeks. Ergen had said his offer was subject to completing an examination of Sprint's books.

Sprint has said that it would evaluate Dish's bid but has yet to change its recommendation for the SoftBank offer.

Speculation has swirled that Sprint's board may consider delaying the vote on the SoftBank deal until Dish finishes looking at Sprint's books and decides whether it wants to make a binding offer. Sprint has declined to comment on whether it will change the date of the meeting.

SoftBank has been under pressure from investors to raise its bid for Sprint as several shareholders have said they believe Dish is offering better value.

Sprint shares have risen more than 15 percent since Dish made its unsolicited bid on April 15.

So far, just one Sprint investor, Ontario Teachers Pension Plan - the fifteenth biggest shareholder in the No. 3 U.S. mobile service provider, has come out and said it would vote in favor of SoftBank's offer.

"It's going to be very difficult for SoftBank to garner enough shareholder support to vote the transaction through under the current agreed upon terms," said Roy Behren, a money manager at Westchester Capital, which owns more than 19 million Sprint shares and believes Dish has made a better offer.

Hedge fund titan John Paulson, whose fund is the second biggest shareholder with 7.7 percent of Sprint according to public data, said in April that Dish's offer was compelling. Omega Advisors, the ninth biggest Sprint investor with more than 2 percent of Sprint shares, has also said Ergen's offer was in the lead.

Dish reiterated in a statement on Monday that it believed its proposal "is both economically and strategically superior to that of SoftBank".

On June 13, shareholders of Clearwire Corp, which is majority owned by Sprint, are due to vote on Sprint's offer to buy out the rest of Clearwire it does not own for $3.40 per share.

But Dish has also complicated that deal process by making a $4.40 per share counter bid for Clearwire, which is currently evaluating Dish's offer. Clearwire will have to make a statement about the Dish bid before the shareholder vote.

However, the Clearwire vote also looks like it could run into trouble, as investors have already boosted the company's share price well above Sprint's offer price of $3.40 per share. Clearwire shares closed at $4.27 on Nasdaq on Monday.

"It's not likely anything would be approved at the June 13 meeting," said one source familiar with the matter who asked not to be named.

Dish shares closed down 28 cents or 0.7 percent at $38.86 on Nasdaq, while Sprint shares ended off 6 cents or 0.8 percent at $7.18 on the New York Stock Exchange.

(Reporting by Ben Berkowitz, Nicola Leske and Sinead Carew; Editing by Maureen Bavdek, Carol Bishopric and Bernard Orr)