Tags: Dish | Sprint | breakup | fee

Dish-Sprint Talks Said to Falter in Part Over Breakup Fee

Tuesday, 11 Jun 2013 03:13 PM

Sprint Nextel Corp. demanded a $3 billion reverse breakup fee from Dish Network Corp. during their merger talks, one of a series of disagreements that has kept them from reaching a deal, people familiar with the matter said.

Dish had proposed a $1 billion fee instead, which would be paid if the takeover didn’t win regulatory approval, said one of the people, who asked not to be named because the discussions were private. Sprint announced yesterday that Dish hadn’t produced an “actionable” bid and moved instead to endorse a sweetened $21.6 billion offer from SoftBank Corp., which originally agreed to acquire the carrier in October.

Dish, the satellite-TV provider controlled by billionaire Charlie Ergen, now faces a June 18 deadline to submit what Sprint has described as a “best and final” fully financed counteroffer. Dish said yesterday that it continues to view Sprint as holding “tremendous value” and is considering its strategic options.

Dish’s failure to show committed financing and to make a definitive merger proposal concerned Sprint, according to a person familiar with the negotiations. Dish, on the other hand, was frustrated by what it perceived as Sprint’s slowness to deliver documents necessary to conduct due diligence and complete an offer, other people said.

Poison Pill

As part of the new agreement with SoftBank, Sprint plans to adopt a shareholder-rights plan, also known as a poison pill, that will make it more difficult for Dish or other suitors to make unsolicited bids in the future.

Scott Sloat, a spokesman for Overland Park, Kansas-based Sprint, and Bob Toevs, a spokesman for Englewood, Colorado-based Dish, didn’t respond to messages seeking comment.

Sprint asked for a high reverse breakup fee out of concern the deal would drag on for many more months before getting approved, one person said. Sprint and SoftBank expect to be able to complete their transaction by early July, they said yesterday. SoftBank has agreed to pay a reverse breakup fee of $600 million if the deal falls apart, according to filings.

Sprint told Dish it anticipated it would take a year for a Dish merger to close, two of the people said. Dish estimated it would be closer to four months, they said.

Dish and its advisers met for several hours on June 7 with Sprint’s board and its Bank of America Corp. advisers in order to produce a final offer, one of the people said.

Dish was waiting on more documents from Sprint and was told it had several more days to put in its bid, the person said. The company didn’t know the Softbank bid was coming, according to the person.

Sprint is the third-largest U.S. wireless carrier, behind Verizon Wireless and AT&T Inc. SoftBank, based in Tokyo, plans to use Sprint to expand into North America. Ergen, meanwhile, wants to add Sprint’s wireless services to his company’s satellite-TV offerings.

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Sprint Nextel Corp. demanded a $3 billion reverse breakup fee from Dish Network Corp. during their merger talks, one of a series of disagreements that has kept them from reaching a deal, people familiar with the matter said.
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2013-13-11
Tuesday, 11 Jun 2013 03:13 PM
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