Sprint Confirms That It Is Formally In Talks With Softbank

Investors have faced confusion and hope all in the same day over the notion that Sprint Nextel Corporation (NYSE: S) could be the next big telecom takeover target. Whether it is a majority stake sale or whether or not it ends up being an outright merger ambition is up for you to decide. The good news now is that we at least finally have some formal confirmation that Sprint is in talks with Softbank. We would warn investors that this sure sounds more and more like the prior reports of a majority stake sale rather than an outright acquisition.

Sprint has confirmed that it "is currently engaged in discussions with Softbank regarding a potential substantial investment by Softbank in Sprint."

The company did put out the traditional caveats and hedges by saying that there can be no assurances that these discussions will result in any transaction. It also said that the terms are not set.  What Sprint did confirm is "such a transaction could involve a change of control of Sprint." As a reminder, a change of control does not formally mean a takeover. It could easily be the 75% or so stake that had been discussed earlier.

As far as what to expect, investors will have to just sit and wait now. Sprint said that it does not intend to comment further unless and until an agreement is reached.

No formal mention was made of Clearwire Corporation (NASDAQ: CLWR). Clearwire shares are still up about 38% at $1.80. Sprint shares are now up 17% at $5.89.

JON C. OGG


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