The Japanese conglomerate SoftBank Corp., which is vying to buy telecom giant Sprint Nextel Corp., is reportedly resorting to what could be termed financial blackmail to persuade banks not to finance DISH Network's competing offer for Sprint.
SoftBank is under fire for its close ties to a Chinese firm linked with massive cyberattacks on U.S. computer systems and concerns that it should not get control of Sprint, one of the nation’s leading telecommunications firms.
Investigation: China Secretly Stockpiling Gold
SoftBank owns 33 percent of the Chinese e-commerce firm Alibaba, which has scheduled an Initial Public Offering, and is telling investment banks that if they want to participate in the IPO, they should pass on financing the DISH offer for Sprint, Reuters reported.
"SoftBank's unusual move is the latest sign that the battle for control of Sprint, the No. 3 U.S. wireless carrier, is fast turning into a no-holds-barred brawl between SoftBank founder Masayoshi Son and DISH's Charlie Ergen," Reuters observed.
SoftBank Corp. announced in October that it was seeking approval from the U.S. for a $20 billion purchase of a 70-percent stake in Sprint.
Last month satellite TV company DISH challenged SoftBank's bid for Sprint, offering $25.5 billion for the entire company.
DISH has said it will need to raise $9 billion to finance the purchase of Sprint. But at least one major bank has withdrawn from financing the DISH bid following Softbank's move, sources told Reuters.
Alibaba's IPO is expected to take place in the fourth quarter of this year or early next year, at a valuation of $60 billion to $80 billion, according to the 24/7 Wall St. website.
A consortium of nine banks, including Citigroup Inc. and JPMorgan Chase Co., recently financed $8 billion in Alibaba debt and are believed to have the inside track on the Alibaba IPO, which would generate lofty fees for the banks.
SoftBank's bid has raised concerns due to the firm's close financial ties to the Chinese telecom company Huawei.
In October 2012, the House Intelligence Committee, after an 11-month investigation, concluded that U.S. firms should not do business with Huawei or another Chinese telecom company, ZTE, because of their extensive ties to the Chinese government.
The committee also found that the two firms posed a major cyber-security threat to U.S. intellectual property.
Editor's Note: Trump Says U.S. Losing Economic Power To China, No Longer A Rich Country
Earlier this week, former Arkansas Gov. Mike Huckabee told Newsmax that the SoftBank offer "definitely needs to be not only scrutinized, it needs to be curtailed without some clear understanding as to what the implications could be.
"We know that China has been illegally eavesdropping.
"We cannot afford to allow something as significant as our communications networks to be in the hands of a country that has proven not to be trustworthy when it comes to information and of that information being handled responsibly and honorably."
Republican Sen. Orrin Hatch of Utah told Newsmax he is also "concerned" about the SoftBank bid.
© 2016 Newsmax. All rights reserved.