By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Englewood, Colo. — Dish Network has proposed a $25.5 billion merger with Sprint Nextel, exceeding the bid by Japan’s Softbank to buy the cellular carrier.
Satellite-TV provider Dish hasn’t formally withdrawn its offer to purchase cellular carrier Clearwire, which is majority-owned by Sprint but not controlled by Sprint. Dish said its offer for Sprint is not contingent on Sprint succeeding in its current bid to purchase the remaining Clearwire shares that it doesn’t own.
Dish Network chairman Charlie Ergen said the merger with Sprint Nextel “will create the only company that can offer customers a convenient, fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services.”
The merged spectrum will also allow the merged company to offer improved broadband services to homes with “inferior or no access to competitive broadband services,” he said.
The combined company “will have a leadership position in video, data and voice and the necessary broadband spectrum to provide customers with rich content everywhere, all the time,” he said.
The merger would reduce joint costs by $1.3 billion in the first year and by $1.8 billion in three years, thanks in part to lower acquisition costs and other synergies, the company said.
The merged company would use Dish’s 700MHz spectrum to deliver Dish programming in a one-to-many setup to mobile devices.
Ergen foresaw Sprint-owned stores selling Dish’s residential services and eventual joint subscriptions to both services.
The proposal would not be subject to a government review that foreign-owned SoftBank’s proposal is, he noted in a conference call.
Dish, however, needs to raise an additional $9.3 billion to pay for the merger.
The proposal, said to represent a 13 percent premium to the value of the existing SoftBank proposal, consists of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7 per share, and Sprint Nextel shareholders would own 32 percent of the merged company.
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