Hesse remains CEO as Sprint, Softbank close $21.6B merger
SoftBank completed its $21.6 billion acquisition of Sprint Nextel on Wednesday, capping a months-long effort that was complicated by two bidding wars and some national-security objections but is expected to produce a stronger rival to the dominant U.S. mobile operators.
Sprint CEO Dan Hesse will keep his post in the new company, called Sprint Corporation, while SoftBank founder, Chairman and CEO Masayoshi Son will be chairman of the new company. The company will remain in Overland Park, Kansas, and continue to be traded under the ticker symbol “S.”
With the close of the deal, Sprint officially dropped “Nextel” from its corporate name just a few days after shutting down the network it acquired through its 2005 purchase of Nextel. The new Sprint will still have more than 55 million customers but will be a much stronger company than it was before SoftBank’s buyout, benefiting from full ownership of former partner Clearwire and $5 billion of investments by its new majority owner. SoftBank will own 78 percent of the company.
Japan-based SoftBank first proposed buying Sprint last October, offering a total of $20.1 billion for the third-largest U.S. carrier in a deal that would include an $8 billion investment in the company. That investment would help Sprint buy out Clearwire and gain access to its huge radio spectrum holdings.
But in January, Dish Network launched a higher bid for Clearwire, and in April it offered to buy Sprint itself for $25.5 billion. Though Dish ultimately dropped both bids, its pressure drove up both the price Sprint paid for Clearwire and what SoftBank paid for Sprint. Ultimately, SoftBank slightly increased its bid and restructured it, giving shareholders more cash and Sprint just $5 billion of investment.
SoftBank’s proposal also drew warnings from some U.S. lawmakers but ultimately passed muster at the Committee on Foreign Investment in the United States. Possibly the biggest national-security concern surrounded the homegrown Clearwire: In March, Rep. Mike Rogers, a Michigan Republican and the chairman of the House Intelligence Committee, said Sprint and SoftBank had pledged to try to replace gear already in Clearwire’s network that was made by Huawei Technologies. The companies also promised not to buy gear in the future from Huawei, which has been accused of ties to China’s military.
In another security move, Admiral Michael Mullen, former chairman of the U.S. Joint Chiefs of Staff, has been named to Sprint’s board as security director.
Ronald Fisher, director of SoftBank and president of SoftBank Holdings, will be vice chairman of Sprint. Three Sprint Nextel board members—Robert Bennett, Gordon Bethune and Frank Ianna, will also be on the new board. Other members of the board have not yet been determined, Sprint said in a press release.