Japan's Softbank in Takeover Talks with Sprint Nextel
Japanese mobile network, Softbank Corp is reported by multiple sources to be in talks to buy a majority stake in the USA based Sprint Nextel.
See update below - the talks have now been confirmed.
Sprint Nextel is itself said to be mulling a spoiler takeover bid for its smaller rival MetroPCS, which has just agreed a merger with T-Mobile USA.
Sprint has a stock market capitalisation of around US$15 billion compared to the US$40 billion that Softbank Corp is worth. Softbank is also in the middle of a US$1.84 billion acquisition of smaller local mobile network, eAccess.
Japanese newspaper, The Nikkei reported that Softbank is looking to buy two-thirds of the US mobile network. The report was confirmed by sources speaking to both Dow Jones and Reuters, although the companies are not commenting at the moment.
Softbank has grown its mobile businesses though acquisitions, starting with the 2006 deal to buy what was then called Vodafone Japan.
Once, the Japanese networks were sufficiently different from the rest of the world that overseas aquisitions seemed difficult to justify. However, convergence in smartphones and network infrastructure means that Japanese networks now run on platforms similar to those used in the USA, offering opportunities for Softbank to cut costs and gain savings from bulk purchases.
The Nikkei noted that both Sprint and Softbank rely heavily on Ericsson hardware, offering a common platform for upgrades.
Sprint Nextel has now confirmed that talks are underway between the two companies which would see a substantial investment by Softbank in Sprint, which would include a change in control of the ownership of the company.