Softbank Corp announced that they will be paying 20.1 billion for 70 percent of Sprint Nextel in a press conference on Monday.
Sprint, the third largest cellphone company in the U.S., decided to sell a controlling stake to Softbank to help the company grow in hopes to become larger than its competitors in the near future.
The deal was announced in a press conference in Tokyo with both Softbank Corp. President Masayoshi Son and Sprint Nextel Corp. Chief Executive Dan Hesse on hand for the announcement.
"This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward," said Hesse at the press conference.
Sprint has not been doing so well the past seven years or so as phone companies like Verizon and AT&T have remained ahead of Sprint by a large margin as the top mobile phone companies in the U.S.
Sprint shareholders can now turn in 55 percent of their shares to Softbank in exchange for $7.30 per share.
Sprint shares were up just 3 cents at $5.76 on Monday, which means that investors had correctly predicted the transaction last week and the effect it would have on the market when they sent the stock up 14 percent. This could have happened due to the rumors that were started during the middle of last week that there was a proposed deal taking places between Softbank and Sprint according to the Associated Press.
Softbank is an internet and telecom company and as part of the deal they would buy $8 billion of shares directly from the wireless carrier and $12 billion shares in the market according to the Wall Street Journal.
Softbank debuted into the wireless world in 2005, when they bought Vodafone Japan. The company was able to turn Vodafone around, which makes Son believe they can do the same for Sprint.
Softbank was the first carrier to offer the iPhone in Japan, and since then it has become a huge hit. The iPhone has helped the company steal customers away from its two bigger rivals, thus allowing it to expand at the same time.
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