| TOKYO, April 16
TOKYO, April 16 Masayoshi Son, billionaire
founder of Japanese mobile carrier SoftBank Corp, is
expected to stay in the battle for U.S. wireless service
provider Sprint Nextel Corp - even though he could walk
away with more than $3.5 billion in gains from currency hedging,
a convertible bond and break-up fee.
Son, a rare risk-taker in Japan's conservative corporate
culture, is likely to put his ambition to create a global
company, with a $20.1 billion investment in Sprint giving
SoftBank a toehold in the United States, ahead of quick
financial gains, analysts said on Tuesday.
Dish Network Corp, the No. 2 U.S. satellite TV
provider, on Monday offered to buy Sprint for $25.5 billion in
cash and stock, trumping SoftBank's proposal last October to buy
70 percent of Sprint in the biggest Japanese overseas
acquisition. The offer by Dish, which wants to
combine its satellite service with Sprint's wireless network in
an attack on telecoms powerhouses Verizon Wireless
and AT&T Inc, represents a 13 percent premium to
"The issue for Son is that he wants to build a global
company, he promised to do that. This is probably the one shot
he has of doing that and I don't think he's going to walk away,"
said Neil Juggins, Hong Kong-based regional telecoms analyst at
JI Asia, an affiliate of Societe Generale.
A Tokyo-based analyst, who declined to be named, also said
Son was unlikely to back off and would probably raise his offer
to seal the Sprint deal. "Son isn't going to give up that
easily. I expect him to come back with a higher offer," the
SoftBank has yet to respond publicly to the Dish move on
Sprint, but a spokesperson told IFR, a Thomson Reuters company,
that it will go ahead with a dual tranche bond issue in dollars
and euros that is worth $2 billion. That bond
issue is to help fund its Sprint deal.
CURRENCY HEDGING, CONVERTIBLE BOND
Announcing the Sprint investment last year, SoftBank said it
hedged its acquisition with a forward exchange rate of 82.2 yen
to the U.S. dollar, saving some 200 billion yen ($2.04 billion)
in the process. The yen has since weakened 24 percent against
the dollar as a result of an aggressive monetary policy by
Japan's central bank to lift the country out of deflation.
In addition, SoftBank stands to make around a $1 billion
gain from a $3.1 billion convertible bond it purchased from
Sprint last year at $5.25 per share. SoftBank can convert the
bond as soon as it abandons a Sprint deal. Sprint shares last
traded at $7.06 after jumping as much as 17.8 percent on Monday
to a near 4-1/2-year high.
On top of all that, SoftBank would also be paid a $600
million break-up fee if Dish walks away with Sprint.
"Short-term, yes, there are benefits that they would gain if
they walked away, but I think SoftBank shareholders would mark
them down quite heavily," said Juggins.
SoftBank shares fell 8.9 percent to a 2-week low of 4,270
yen in Tokyo on Tuesday - set for their biggest one-day drop in
6 months, since it announced its Sprint investment. That drop
wipes around $5 billion off its market value.
In January, SoftBank reported a 12.6 percent increase in
April-December operating profit to more than 600 billion yen