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All Sprint acquisition discussion (was "Japan's Softbank in talks for $12.8 bln Sprint stake")


kckid

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I'm aware of that. What I dont know is if that is the situation here considering that softbank is already carrying a $10 billion dollar debt. http://www.reuters.com/article/2012/10/12/us-sprint-softbank-idUSBRE89A0I520121012

I had not seen that article. That would be a lot of debt to carry on your balance sheet. Son must believe that the price he is getting Sprint for is too good to pass up. High debt right after a merger does happen-ATT was going to finance 23 billion of the 39 billion to buy T-Mobile if I remember correctly. They better have a good plan to bring in a lot of revenue to pay it off. Let's hope for great news when Sprint releases 3rd quarter earnings. Are we in for a bit of a surprise? Last quarter nearly all their loss was attributable to iden costs. Maybe a very small loss or small profit this quarter?

 

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I had not seen that article. That would be a lot of debt to carry on your balance sheet. Son must believe that the price he is getting Sprint for is too good to pass up. High debt right after a merger does happen-ATT was going to finance 23 billion of the 39 billion to buy T-Mobile if I remember correctly. They better have a good plan to bring in a lot of revenue to pay it off. Let's hope for great news when Sprint releases 3rd quarter earnings. Are we in for a bit of a surprise? Last quarter nearly all their loss was attributable to iden costs. Maybe a very small loss or small profit this quarter?

 

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By all accounts Son thinks the time is ripe to enter the US market and he cant pass it up. If they are financing because they don't have enough cash on hand then the cash infusion that everybody ishoping for won't happen. I would think it would also dampen any aspirations of more aggresive pricing. I would love to get a look at their balance sheet.
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I think that's exactly right - this is too good a deal for the long term to pass up. Sprint is undervalued and the the opportunity to get in on the US market doesn't happen every day. I think they recognize, once again, that in the mid to long term Sprint is an excellent investment and that they can really shake things up.

 

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If this goes through, i don't I'll have the same respect for Sprint anymore. Don't know that I'd leave just yet, just won't be a fan boys anymore. Just feels like they're selling out.

 

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Eh...T-Mobile is owned by a German company. Verizon wireless is 45% owned by Vodafone, a British company. NTT DoMoCo at one point made a substantial investment in at&t. This is just the reality of a global economy i suppose.

 

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How does Clearwire factor in to the SoftBank-Sprint tie up? Take a look...

 

http://seekingalpha.com/article/922181-as-sprint-and-softbank-talks-continue-where-does-clearwire-stand

 

AJ

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Most likely Absolutely nothing. Soft is investing in sprint.. They're not doing a hostile take over.

 

If employees are going to be laid off then it most likely the under performing ones.

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If employees are going to be laid off then it most likely the under performing ones.

 

...who will then be required to commit seppuku for their dishonor.

 

AJ

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First post here. but I wonder what would happen to us Ericsson employees and the Sprint network assurrance contract?

 

Well as you mention, it's a contract so I imagine that Sprint will honor it to the end regardless of whether they get a cash infusion from SoftBank. If not, I'm sure they'd be some kind of ETF involved...and I'm sure that it'd be more than $350. :)

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David Faber of CNBC who has been on top of this story almost from the beginning is reporting that this is pretty much a done deal:

 

http://www.cnbc.com/id/49408877

 

 

Softbank to Buy 70 Percent Stake in Sprint: Source

 

 

 

 

Published: Sunday, 14 Oct 2012 | 4:25 PM ETicon_text_minus.gificon_text_plus.gif

 

 

By: David Faber

 

 

 

Blloomberg | Getty Images

 

Softbank and Sprint have reached a deal under which Softbank will pay $20 billion for a 70 percent stake in the wireless telecom operator, according to people close to the situation.

The deal is expected to be announced Monday morning and while certain details are still being worked out, the boards of both companies have signed off on a transaction under which Softbank will buy $8 billion worth of shares directly from Sprint and tender for another $12 billion worth of the shares from existing holders.

 

The price of the tender offer is $7.30 a share, a large premium to Sprint's current price. Given the deal's structure, it will not require a shareholder vote.

 

The equity being purchased directly by Softbank includes a $3 billion convertible bond purchase that is exercisable at $5.25 and will be sold well before the deal closes, in order to provide funds for Sprint as it moves towards purchasing the roughly 52 percent of Clearwire it does not already own.

 

While a Sprint purchase of Clearwire will not be announced Monday, Sprint is working on that deal and needs to insure the governance for Clearwire is in its control prior to closing the Softbank transaction.

 

The remaining $5 billion in primary equity being purchased by Softbank is likely to be purchased at $7.30 a share, although details are still being negotiated, said people familiar with the talks.

The purchase is a huge one for Softbank, which is essentially making a $20 billion gamble that it success in developing LTE wireless services in its home market of Japan can be translated to the U.S. Sprint, while the third largest wireless provider in the U.S., significantly trails the two market leaders, Verizon and AT&T.

 

Softbank's hope, say people familiar with its strategy, is to build on Sprint's spectrum position, while hoping the company can further consolidate the wireless industry through acquisitions of more spectrum and other operators. The deal is expected to close in roughly six months.

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Saw that also. What does this line mean:

 

" tender for another $12 billion worth of the shares from existing holders."

 

Do existing shareholders sell their stock (or 70% of it) to Softbank for $7.30 assuming the deal goes through? Also what does it mean for my short calls that are ITM right now for 50% of my position?

 

I'll definitely call my broker tomorrow but if anybody is familiar about it around here I"d be curious to hear your interpretation.

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Hmm 20 billion for a 70% stake is a lot to infuse into Sprint. At 12.8 billion Softbank that was originally reported I would say that what Sprint got is getting the low end of the stick but at 20 billion, I think its more fair if Softbak is going to get a 70% controlling stake of Sprint. With 20 billion, Sprint can easily snatch up Clearwire and make a play at MetroPCS itself away from Tmobile or the Tmobile/MetroPCS new co in 2 years.

 

I just want Sprint to speed up Network Vision because to me its getting a bit slow given all the delays experienced. Cities like NYC and LA do not look LTE deployable ready especially LA if its set to launch by end of October. I think for NYC and LA, December is more likely a better time to launch LTE in those markets since hopefully it will have more coverage.

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I think Sprint adds Clearwire's spectrum back to their LTE plans like they originally planned. They could come out and claim to be the Fastest LTE network, plus Unlimited Data. Fast Speeds + Unlimited data could shake up the wireless industry.

 

I can't see Sprint, sale or not, staying with the unlimited data forever. They will use it as long as they can to gain market share.

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Well, CNBC is calling it a done deal with the official announcement to be made tomorrow (Monday).

 

http://www.cnbc.com/id/49408877

 

If true I hope to also see immediate action by SPrint/SoftbANK (SPANK) to snaffle up control of Clearwire and their massive bandwidth licenses.

 

If that happens, it's a three horse race again. B)

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Per the CNBC article, sounds like Sprint gaining control of Clearwire is a precondition for the deal closing.

 

While a Sprint purchase of Clearwire will not be announced tomorrow, sources familiar with the situation tell me Sprint is working on that deal and needs to insure the governance for Clearwire is in its control prior to closing the Softbank transaction.

 

http://www.kansascit...ve-deal-to.html

 

Per this KC Star article, it also looks like part of the deal is $3 billion in convertible bonds, which will be sold before the deal closes to provide funding for Sprint. Should allow them to keep pace on NV, or even speed up...

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Also what does it mean for my short calls that are ITM right now for 50% of my position?

 

Please elaborate. I do not pretend to know that much about the stock market because it is a free market sham. But if you shorted S, you are likely in trouble.

 

AJ

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Please elaborate. I do not pretend to know that much about the stock market because it is a free market sham. But if you shorted S, you are likely in trouble.

 

AJ

 

No, I'm long Sprint. When I bought it somewhere around $2.40 I also sold Jan calls for 50% of my stake with a strike of $3. So essentially I'm only long half of what I bought but I'm wondering how it would be handled in this sale. If I were to sell 70% of my stock how would the short calls be handled?

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No, I'm long Sprint. When I bought it somewhere around $2.40 I also sold Jan calls for 50% of my stake with a strike of $3. So essentially I'm only long half of what I bought but I'm wondering how it would be handled in this sale. If I were to sell 70% of my stock how would the short calls be handled?

 

You won't be able to sell 70% of your stock, you can only sell the stock that is not under a covered call. Unless perhaps if you did a naked call. But if you did that you will have to buy enough stock (at whatever price you can get) to cover those calls.

 

you would either;

 

a) do nothing and sell those lots for $3, so you will keep the .60c per share profit + whatever you got paid for your covered calls.

 

b. try to close those covered calls, this will likely cost you more than you got paid for them (you will be losing money) but you will get to keep your shares, which ideally if the price goes up high enough may offset what you have to pay to close your calls.

 

c) depending on share price vs options price (and if you have the cash or margin available), it might be better to try to buy new shares to replace your covered calls.

Edited by dedub
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you would either;

 

a) do nothing and sell those lots for $3, so you will keep the .60c per share profit + whatever you got paid for your covered calls.

 

b. try to close those covered calls, this will likely cost you more than you got paid for them (you will be losing money) but you will get to keep your shares, which ideally if the price goes up high enough may offset what you have to pay to close your calls.

 

c) depending on share price vs options price (and if you have the cash or margin available), it might be better to try to buy new shares to replace your covered calls.

This is confusing smh. I'm new to the market

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