This sure is turning into a high stakes game of wireless M&A poker. In what will surely be the story of the week, Dish has now launched a $25.5B bid for Sprint Nextel (NYSE:S, news, filings) itself. That works out to something like $7/share, which Dish says represents a 13% premium to the bid for 70% of Sprint by Softbank and is 12.5% above where Sprint's stock closed on Friday.
Dish has been trying to disrupt Sprint's purchase of Clearwire for months now, but has found it difficult to get its foot further in the door. While not turning them down outright, Clearwire has started taking Sprint's funding offer and late last week played the default card by saying it is considering not paying interest on its debt in June.
Softbank's bid for Sprint was the driver for Sprint's move on Clearwire, and I guess Dish CEO Charlie Ergen decided that he might as well go for broke and take on Softbank directly. Well, if he didn't have Masayoshi Son's attention before, he surely does now.
The bid is for $4.76/share in cash, and $2.24/share in DISH stock, which means Dish will have to come up with some $17.3B in cash to fund the purchase. That's no small amount, but with the $8.3B in cash they have on hand plus a "Highly Confident Letter" from their financial advisor Barclays - it's certainly not unrealistic.
Dish even went as far as creating a microsite with details of the deal. They foresee $37B in net present value of synergies and growth opportunities, and a net leverage of 4.7x including the Clearwire deal at $2.97. Yep, that last part could hit Clearwire shareholders today. If Dish's competing offer for Clearwire evaporates in favor of this deal, those arguing for a better deal from Sprint will lose their main bargaining chip.
But does Dish have a chance of stopping Softbank at this late date? Or could it even turn into some sort of three-way deal, since Softbank only wanted 70% anyway? I suppose we'll just have to wait to see what Sprint's board of directors says about all this...