* Could be largest Japanese acquisition in U.S. ever
* Nikkei says Softbank would also pursue MetroPCS
* Deal could lead to Sprint buying Clearwire - analysts
* Sprint, Clearwire soar in afternoon trade; MetroPCS down
* Softbank shares tumble as much as 17 percent in heavy
By Taro Fuse and Sinead Carew
TOKYO/NEW YORK, Oct 12 Japanese wireless service
provider Softbank Corp is looking to buy about 70
percent of Sprint Nextel Corp in an aggressive move that
would make it a major player in the U.S. mobile market.
Softbank's ambitions may not stop with Sprint, which might
be looking to buy out its partner, wireless service provider
The Japanese company might use Sprint as a vehicle to make a
run at smaller Sprint peer MetroPCS Communications Inc,
a two-step transaction that would potentially cost more than 2
trillion yen ($25.55 billion), a Nikkei report said.
That would make the deal the biggest ever overseas
acquisition by a Japanese company and vault Softbank into the
upper echelons of wireless carriers worldwide.
Softbank and Sprint confirmed they are holding talks. While
Sprint shares rose more than 14 percent, investors dumped
Softbank shares in Tokyo on Friday, pushing the stock down as
much as 17 percent to its lowest level in nearly five months.
"How Softbank will finance this deal, what this means for
management structure and its finances, that's where the market
is looking at right now," said Mitsushige Akino, chief fund
manager of Mitsuyoshi Asset Management.
Softbank is eyeing a controlling stake in Sprint worth more
than 1 trillion yen ($12.8 billion) and is in talks with several
banks on financing the bid, a source with direct knowledge of
the matter said.
A second source, who would not speak on the matter publicly,
said Softbank was seeking a stake of about 70 percent, which it
could achieve by buying some newly issued shares directly from
Sprint and tendering for the rest.
By raising new equity directly, Sprint would be able to
shore up its balance sheet and potentially fund other deals,
such as a buyout of Clearwire in which it already holds about 48
Sprint shares rose as much as 19 percent on Thursday to
their highest levels since the summer of 2011, on the heaviest
trading volume in the stock's history. The stock closed 14.3
percent higher at $5.76 on New York Stock Exchange.
Clearwire shares closed almost 71 percent higher at $2.22.
Clearwire, which has been looking for new funding sources, has
said it has enough money until at least the middle of 2013.
It declined to comment on Thursday and its chief financial
officer pulled out of a conference presentation at the last
minute without explanation.
A major Sprint investor said any Softbank investment should
be used to buy out the rest of Clearwire, to give Sprint
attractive wireless spectrum assets and to speed up Clearwire's
upgrade of its wireless network with faster data speeds.
"I just don't think there's any deal unless it involves
Clearwire. I don't think you'd see one without the other," said
Daniel Martino, a fund manager at T. Rowe Price, which owned
47.2 million Sprint shares as of the end of June.
Sprint, whose market capitalisation was $15.12 billion at
Wednesday's market close, is the third-largest U.S. carrier,
with more than 56 million users at the end of June, even after
losing customers for years.
"In terms of (Sprint) standalone, we believe the asset
represents the only way for a potential new entrant to get a
national presence immediately in the U.S.," Wells Fargo analyst
Jennifer Fritzsche wrote in a note to clients.
The Softbank news comes just days after a source told
Reuters that Sprint had been considering bidding for MetroPCS,
which agreed this month to merge with Deutsche Telekom AG's
MetroPCS shares fell sharply at the open, turned positive in
but then fell again, ending down 3.3 percent at $11.64.
At Sprint headquarters in Overland Park, Kansas, a long time
manager of the company said takeover rumours were nothing new.
"This will be interesting to see if it happens; if it has
legs," the manager, who declined to be identified, said. "There
are always a bunch of rumours. Something like this is always a
possibility when your stock price is so low."
Softbank has been exploring ways to get into the U.S. market
for some months, as it sees opportunities for growth that would
help offset a stagnating market in Japan, said a third source,
who declined to be identified.
Founded and led by Masayoshi Son - ranked by Forbes as
Japan's second-richest man - Softbank has grown from a packaged
software distributor 30 years ago into a broad
telecommunications group worth more than $40 billion.
"He's the definition of patient capital," Martino of T. Rowe
But it faces tougher competition at home against the likes
of KDDI Corp and NTT Docomo.
Japanese media said buying Sprint - which competes in the
United States against Verizon Wireless and AT&T
Inc - would also make it cheaper for Softbank to procure
smartphones and other mobile devices.
Benjamin Powell, a former general counsel to the director of
national intelligence now in private practice at WilmerHale,
said the deal was very likely to require a government review
because it involved sensitive telecommunications networks. But
several analysts said regulators were likely to eventually look
favourably on a deal.
Japanese companies made a record 642 cross-border deals last
year, Thomson Reuters data show. Buoyed by a stronger yen
, the value of all overseas deals rose to $69.5 billion,
up 81 percent from 2010, also a record.