TOKYO -- Tokyo-based mobile phone company Softbank has reached a
deal to acquire 70% of U.S. wireless carrier Sprint Nextel for $20.1 billion in the largest ever foreign acquisition by a Japanese company.
The
deal, announced Monday at a joint news conference in Tokyo by Softbank
President Masayoshi Son and Sprint Chief Executive Dan Hesse, was given a
green light by the boards of both companies. It still needs approval
from Sprint shareholders and U.S. regulators. Softbank said the deal is
expected to be completed by the middle of next year.
The deal will
bring together the third biggest mobile carriers of both Japan and the
U.S., underlining the growth ambitions of Softbank, which has made a
series of acquisitions and investments over the last couple of decades,
including Yahoo Japan, the Japan unit of British mobile company Vodafone
and Alibaba Group, a Chinese e-commerce company.
Son said the investment made sense because the U.S. is the world's biggest market in smartphones, and it was still growing.
The
news of the deal, which leaked late last week, had spooked investors
worried about such a big investment and sent Softbank shares lower by
about a third in recent sessions. Shares of Sprint, in contrast, shot up
in anticipation of the offer.
Sprint has struggled in recent
years to compete with Verizon and AT&T. The company has $21 billion
in long-term debt, and has launched a costly network restructuring and
signed a long-term contract to buy $15.5 billion worth of iPhones from
Apple Inc. over four years.
Son is looking abroad for new growth
as the Japanese mobile market has been stagnant for years. Softbank has
been an exception in racking up strong profit despite such stagnation,
largely on the popularity of the iPhone.
Softbank was the first
carrier to offer the iPhone in Japan, and was the only one in initial
years. The iPhone has been such a hit in Japan it has shaped Softbank's
brand image and helped it lure customers away from its two bigger
rivals. Son said earlier this year that he is determined Softbank will
overtake NTT DoCoMo, the longtime No. 1.
Son said the advent of
smartphones means that the U.S. and Japanese markets have much in
common, and the two companies could benefit and learn from each other.
Son, a graduate of the University of California, Berkeley, said he was only 16 when he ventured alone to the U.S.
"I
am happy to be able to tell you today of my big comeback to the U.S.,"
he said. "This is going to be an even bigger challenge."
Before
Monday's deal, the biggest overseas acquisition by a Japanese company
was Japan Tobacco Inc.'s purchase of Gallaher Group of Great Britain in
2007 for about $19 billion.
Associated Press