Billionaire John Paulson, one of Sprint Nextel Corp.s biggest investors, said he favors a $25.5 billion takeover proposal from Dish Network Corp. over a board-endorsed bid by SoftBank Corp.
Dish is contributing valuable spectrum, 14 million subscribers, cost synergies and revenue synergies, Paulson said. Dish needs to firm up the financing, but its a compelling offer.
The endorsement from Paulson whose New York-based hedge fund Paulson & Co. owns about 4.2 percent of Sprint shares, according to data compiled by Bloomberg adds momentum to Dishs pursuit of Sprint, the third-largest U.S. mobile phone company. Dish chairman Charlie Ergen seeks control of Sprint to convert his satellite TV company into a wireless juggernaut.
Another Sprint shareholder, Omega Advisors Inc., also said it preferred the Dish offer to SoftBanks. Omega holds a 1.9 percent stake in Sprint, according to data compiled by Bloomberg.
We respect Charlie Ergen and think he will do an excellent job for the Sprint and Dish shareholders, Leon Cooperman, Omegas chief executive officer, said Wednesday in an e-mail.
Sprint, based in Overland Park, agreed in October to a $20 billion deal that would give Tokyo-based SoftBank a 70 percent stake. The Japanese mobile phone companys proposal has superior short- and long-term benefits compared with Dishs highly conditional preliminary proposal, SoftBank said.
Paulson said: Dish and SoftBank are both successful companies with great track records led by strong leaders. Ergen seems fully committed. It will be interesting to see how the Sprint board and SoftBank respond.
Bill White, a spokesman for Sprint, declined to comment on the Paulson statement. The company said this week in a statement that its board will evaluate the offer from Dish, which is based in Englewood, Colo.
Dish is offering Sprints owners $4.76 in cash and 0.05953 shares of Dish for each Sprint share, a stake that would represent about 32 percent of the combined company. Based on Dishs $37.63 stock price at the end of last week, the bid was valued at $7 a share when it was announced this week. Dish said the offer is a 13 percent premium to the implied value of SoftBanks deal, which is also a combination of cash and stock.
SoftBank president Masayoshi Son would need to boost the cash portion of his offer for the No. 3 U.S. wireless carrier by as much as $2 billion to match Dish, said Christopher Larsen, an analyst at Piper Jaffray & Co., in a report.
Last week, SoftBank began marketing $2 billion of bonds in the U.S. and Europe. The company may sell seven-year notes denominated in dollars and euros this week, according to a person familiar with the transaction. The bonds may yield 4.5 to 4.75 percent.