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Posted at 11:11 AM ET, 04/15/2013

Dish proposes $25.5 billion merger with Sprint

Dish Network chairman Charlie Ergen offered an ambitious vision Monday for a $25.5 billion merger with Sprint, outlining plans for a single company that provides broadband, video and voice services for the home and wireless devices.

The satellite provider is looking to upset the proposed deal between the nation’s third-largest carrier and the Japanese wireless company Softbank. The satellite provider has offered $17.3 billion in cash and $8.2 billion in stock in order to merge with Sprint, and said its proposal was “superior ” to Softbank’s $20.1 billion proposal for around 70 percent of Sprint Nextel Corp.

The Softbank deal was seen as a boon for Sprint as an opportunity to build up its network and compete more fiercely with AT&T and Verizon. But Dish and Sprint, Ergen said, could move beyond the wireless world to combine their expertise and assets to build a company that provides broadband, voice and video services in and out of the home.

There’s currently “no company that puts it all together,” Ergen said, saying that combining Dish and Sprint would make for a simpler, more efficient company that can serve consumers across platforms. He described this proposal as a key piece of his company’s larger strategy to create a company that can work across several platforms.

The proposal is aimed at dealing with a growing consumer appetite for data services — particularly mobile video, which Dish officials highlighted as a way differentiate their services.

Consumers spent more on mobile data than on voice services for the first time in 2012, and Ergen said that Dish’s infrastructure and spectrum holdings would complement Sprint’s assets to provide consumers with a broadband network he said could rival those of AT&T and Verizon.

The deal assumes, but does not require, that Sprint will complete its proposed acquisition of Clearwire. On the call, Ergen mentioned the benefit the new company could receive from Clearwire assets several times. He did, however, say that Dish — which has also made a bid for Clearwire — would defer to Sprint’s proposal for Clearwire assets if a Dish-Sprint deal goes through.

In an offer letter, Ergen told Sprint chairman James Hance that this deal “provides more cash and affords your shareholders the opportunity to participate more meaningfully in a combined DISH/Sprint.”

Under the proposed Dish deal, Sprint shareholders would have a 32 percent ownership stake in the new company and receive $7 per share — around $4.76 in cash and the remainder in Dish stock.

Ergen also noted that a deal between Dish and Sprint would not require approval from the Committee on Foreign Investment in the United States — a requirement for the Softbank deal that has been a sticking point for that proposed merger.

In a statement Monday morning, Sprint confirmed that it had received the unsolicited proposal and said that its board of directors will evaluate the proposal “carefully.”

By  |  11:11 AM ET, 04/15/2013

 
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