Japan-based cell service provider Softbank confirmed on Monday that it is buying 70 percent of US-based Sprint in a US$20.1 billion deal. Sprint said about $8 billion from the deal will go towards enhancing its network infrastructure, and that Softbank will help with its LTE network expansion.
"Through this transaction, approximately 55 percent of current Sprint shares will be exchanged for $7.30 per share in cash, and the remaining shares will convert into shares of a new publicly traded entity, New Sprint," Sprint executives said. "Following closing, SoftBank will own approximately 70 percent and Sprint equity holders will own approximately 30 percent of the shares of New Sprint on a fully-diluted basis."
Both companies expect the purchase will help Sprint catch up with AT&T and Verizon, both of which outdistance the company as the top two carriers in the U.S. Sprint is currently in a distant third place in the U.S. mobile carrier market.
"This transaction provides an excellent opportunity for SoftBank to leverage its expertise in smartphones and next-generation high speed networks, including LTE, to drive the mobile internet revolution in one of the world's largest markets,"SoftBank Chairman and CEO Masayoshi Son said. "As we have proven in Japan, we have achieved a v-shaped earnings recovery in the acquired mobile business and grown dramatically by introducing differentiated products to an incumbent-led market."
Once the companies complete the transaction, Softbank will invest an additional $17 billion in New Sprint, and the newly formed company will operate as a publicly traded subsidy of Sprint.
Rumors of the deal surfaced late last week and while neither company denied the reports, they didn't confirm them, until today. Presumably the deal will ultimately help Sprint better compete in the U.S. mobile market and bring LTE support to its iPhone 5 customers sooner.