Dish Launches $25.5 Billion Bid for Sprint
Dish Network Corp is interrupting the third United States wireless carrier acquisition by Softbank Corp. of Sprint Nextel Corp., by making a $25.5 billion bid. Softbank made a complicated proposal to buy 70% of Sprint for $20.1 billion where Dish is offering to pay $4.76 in cash and $2.24 in Dish stock. The largest shareholder and chairman of Dish is Charles Ergen who is attempting to acquire Sprint, which presents the movement from the slow-growing pay television business to the fast-evolving wireless industry. A reason for Dish wanting to acquire Sprint would allow the company to offer the package of video, high speed Internet, and voice service across the country. If accepting the bid, the combined company would carry over $36 billion in debt, but Dish defends itself by claiming that if advised by Barclays, they can raise the funding. Mr. Ergen’s pitch to the board and shareholders is that they are offering much-needed cash and assets, but Softbank is actually a much larger company than Dish.
I believe that Dish Network’s bid should be thought out carefully by Sprint and whether or not that the combined company in the future would make profits. With the estimated $36 billion debt, it may not be worth the acquisition because Dish Network is also newly introduced to the wireless business. Mr. Ergen wants to acquire Sprint to enter the wireless business rather than building their own network. I would not accept the bid because of the lack of experience in Dish Network being a satellite television provider, rather than a wireless network company.
Written by: Samantha Chin
Source: The Wall Street Journal