Sprint and Softbank have announced that the merger of the two companies is now complete, in a deal which is worth $21.6 billion US dollars.
July 10, 2013 – Sprint Nextel Corporation (NYSE: S) (“Sprint”) and SoftBank Corp. (TSE: 9984) (“SoftBank”) today announced the completion of their merger whereby SoftBank has invested approximately $21.6 billion in Sprint, consisting of approximately $16.6 billion to be distributed to Sprint stockholders and an aggregate $5 billion of new capital ($1.9 billion at closing) to strengthen Sprint’s balance sheet. Sprint stockholders voted to approve the transaction at a special meeting of stockholders held on June 25, 2013.
Around 65 percent of the existing Sprint shares are being acquired by Softbank for $7.65 per share in cash, the remaining shares are being converted into shares in the new company.
Details of the Merger
The merger between Sprint and SoftBank marks a significant milestone in the telecommunications industry. The $21.6 billion investment by SoftBank is one of the largest foreign investments in a U.S. company. The deal is structured to provide Sprint with a much-needed financial boost, which includes $16.6 billion allocated to Sprint stockholders and an additional $5 billion in new capital. This new capital is intended to strengthen Sprint’s balance sheet, allowing the company to invest in network improvements and expand its market presence.
The transaction was overwhelmingly approved by Sprint stockholders, with the vote taking place on June 25, 2013. This approval highlights the confidence that stockholders have in the potential benefits of the merger. The acquisition of 65 percent of Sprint shares by SoftBank at $7.65 per share in cash demonstrates SoftBank’s commitment to gaining a controlling interest in Sprint. The remaining shares are being converted into shares of the new combined entity, ensuring that existing Sprint shareholders retain a stake in the future success of the company.
Implications for the Telecommunications Industry
The completion of this merger has several implications for the telecommunications industry. Firstly, it positions Sprint to be more competitive against larger rivals such as Verizon and AT&T. With the financial backing of SoftBank, Sprint can invest in upgrading its network infrastructure, which is crucial for improving service quality and expanding its customer base. This investment is particularly important as the demand for high-speed data services continues to grow.
Moreover, the merger is expected to drive innovation within Sprint. SoftBank’s expertise and resources can help Sprint develop new technologies and services, potentially leading to advancements in areas such as 5G technology and Internet of Things (IoT) applications. This could result in new offerings for consumers and businesses, enhancing Sprint’s market position.
Additionally, the merger may lead to increased competition in the U.S. telecommunications market. With a stronger financial foundation, Sprint can engage in more aggressive pricing strategies and promotional campaigns, which could benefit consumers by providing more choices and better value for their money.
The merger also has broader economic implications. It underscores the attractiveness of the U.S. market to foreign investors and highlights the potential for cross-border investments to drive growth and innovation. The successful completion of this deal may encourage other international companies to explore investment opportunities in the U.S., further stimulating economic activity.
The merger between Sprint and SoftBank represents a significant development in the telecommunications industry. The $21.6 billion investment provides Sprint with the financial resources needed to enhance its network and compete more effectively in the market. The approval by Sprint stockholders and the strategic vision of SoftBank set the stage for a promising future for the combined entity. As the telecommunications landscape continues to evolve, this merger has the potential to drive innovation, increase competition, and deliver benefits to consumers and businesses alike.
Source Engadget
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