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SoftBank to meet Sprint investors, many eye higher bid

Softbank Corp President Masayoshi Son speaks during a news conference in Tokyo April 30, 2013. REUTERS/Yuya Shino
Softbank Corp President Masayoshi Son speaks during a news conference in Tokyo April 30, 2013. REUTERS/Yuya Shino

By Mari Saito and Sinead Carew

TOKYO/NEW YORK (Reuters) - SoftBank Corp President Masayoshi Son may get a frosty reception when he comes to the United States this week to meet Sprint Nextel Corp's major shareholders, as he tries to drum up support for the Japanese company's proposed takeover of the No. 3 U.S. wireless service provider.

SoftBank's billionaire founder, who proposed a $20 billion deal for a 70 percent stake in the U.S. wireless carrier, said on Tuesday that he would discuss the deal with shareholders in a bid to fight off rival Dish Network, a U.S. satellite TV provider, which offered Sprint a $25.5 billion bid.

The executive for the Japanese mobile operator may have a tough time selling the deal, as several shareholders have told Reuters that SoftBank would need to raise its bid in order to win their vote at Sprint's June 12 shareholder meeting.

Two big Sprint shareholders, Paulson & Co and Omega Advisors, have publicly said the Dish offer looks better than SoftBank's. Other shareholders said on Tuesday that they would go to meet Son during his trip but they were skeptical about his arguments against Dish.

While Dish's offer would provide more cash upfront to shareholders, Son has argued that Dish would not be good for the company as it would require Sprint to take on a heavy debt load. He also promises a July 1 close for the deal and warned that Dish regulatory approval may not come until 2014.

Robert Lynch, the director of research for Westchester Capital Management, which owned over 14 million shares in Sprint at the end of December, said that the prospect of a quicker deal close would not be enough to win over his company's vote.

"We think right now that Dish has a better offer on the table. We think SoftBank's going to have to improve their offer," Lynch said, noting that SoftBank's comments about the prospective debt leverage from a Dish deal were overdone.

"We think the leverage is manageable. We think there are synergies here. While raising the leverage is something we looked at we think its not as big of a obstacle as SoftBank is saying," Lynch said.

A big Sprint investor who asked not to be named said they were happy to meet with Son while he is in the United States but that they were hoping to convince him to raise his bid.

"If Mr. Son wants to own Sprint he will have to raise his bid," said the person from a top 25 Sprint shareholder who did not want to be quoted by name ahead of the meeting.

BIDDING WAR

Sprint shares have risen about 16 percent since Dish made its rival offer on April 15, as investors have been betting that the offer will result in a bidding war. The stock was up 3 cents at $7.23 on the New York Stock Exchange on Tuesday.

Son, speaking to reporters at an event unveiling SoftBank's latest smartphones and mobile gadgets, dismissed suggestions from Dish Network Chairman Charlie Ergen last week that the Dish deal would be good for U.S. jobs, saying Americans would continue to be employed under a Softbank deal.

Son also said SoftBank offered more expertise than Dish in the latest mobile technology.

"They have never been in mobile before and that will be their biggest hurdle," said Son.

But another big investment manager, who said their firm was a top-20 Sprint shareholder based on recent share purchases, said Son's concerns about Dish were "not insurmountable."

"I don't think shareholders are going to fall for this," said the manager, who asked not to be named because of a lack of authorization to speak to the media.

The issue of deal timing could be overcome by a higher-priced bid, according to the manager.

TECH ADVANCES

Sprint is currently spending billions of dollars upgrading its network with high-speed wireless services using a technology known as Long Term Evolution (LTE).

Son noted that SoftBank had been at the vanguard of introducing high-speed wireless services in Japan and could help Sprint with its upgrade.

SoftBank uses TD-LTE, one of two key versions of 4G LTE (long-term evolution) technologies that have been adopted by global carriers and promises faster speeds for mobile wireless.

"The difference here is that SoftBank has the network architecture, that SoftBank has the additional know how to bring to Sprint as the sole commercial provider of TD-LTE," he said.

(Reporting by Mari Saito; Editing by Miral Fahmy, Edmund Klamann, Alden Bentley and Andrew Hay)

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