Sprint Nextel Corp. investors mostly opted to receive cash rather than stock when SoftBank Corp.’s takeover of the No. 3 U.S. wireless carrier reaches completion. Toyko-based SoftBank anticipates that will occur Wednesday.
Sprint had 3 billion shares outstanding as of July 5, and holders of about 53 percent of those shares had elected to receive cash. Owners of another 44 percent of the shares had given no response, which means they will get cash by default, Sprint and SoftBank announced. Since 97 percent of Sprint shareholders cashing in their holdings creates more demand for cash than SoftBank can accommodate, shareholders with a cash election will receive a combination of cash and shares of new Sprint common stock.
The high percentage of shareholders taking the cash option is not a surprise considering the amount of speculation surrounding Sprint’s stock in recent months, according to Chris Antlipz, a telecom industry analyst at Technology Business Research. “Shareholders got more than they expected in this deal, and if you look at Sprint’s stock price a year ago it was a fraction of what it is today,” Antlipz said. “This is their best opportunity to profit in the short term.”
SoftBank, which will invest $16 billion in Sprint over the next two years, also had its debt downgraded to a BB+ from BBB, with a stable outlook, by Standard & Poors Monday according to Bloomberg.