This post was just published on ZYX Short Change Alert.
Sprint has an existing deal to be acquired by SoftBank of Japan. SoftBank offered a very attractive deal for Sprint similar to what many investors are clamoring for Dell. Under the deal, SoftBank is to acquire a 70% stake in Sprint and the remaining will be publically traded. Investors like this structure because they are able to cash out a large portion of their holdings but at the same time are able to participate in future growth.
This morning, Dish Network started a Battle Royale for Sprint. Dish is offering $7 per share which includes $4.76 in cash and the rest in Dish stock.
Dish has wanted to get into the wireless business for a while. It has FCC approval for use of the spectrum but has no infrastructure to start a wireless service on its own. Dish will experience significant synergies with its present operations and this allows Dish to potentially beat SoftBank.
Both offers from SoftBank and Dish are expensive because they represent about 5 times 2013 EBITDA of Sprint.
SoftBank CEO, Masayoshi Son, is ambitious and has grand plans for Sprint. It will be interesting to see how he responds to Dish’s offer.
Most subscribers should be out as the stops hit. However from emails, it appears that some subscribers are still holding. Those still holding may consider scaling out on dips. The following data may help.
- Probability of dip under $7.05 – 65%
- Probability of dip under $6.85 – 35%
- Probability of dip under $6.70 – 25%
