Japanese wireless service provider Softbank is in talks with three big Japanese banks to borrow $23 billion (€18 billion) to finance a bid for US firm Sprint Nextel, sources have said.
Softbank has been looking at how to break into the US market for months, but one brokerage warned that a deal of this size could leave Softbank with “unacceptably high” debt.
Sprint, whose market value soared on news of talks with Softbank – confirmed by both firms – has net debt of about $15 billion, while Softbank has net debt of about $10 billion.
Adding the $2 billion net debt of smaller rival eAccess Ltd , which Softbank recently agreed to buy, would raise the new company’s “post-deal gearing levels to unacceptable heights”, said Société Générale said in a client note. “This deal simply appears to be driven by Masayoshi Son’s belief that Sprint Nextel is too cheap, and little more.”
Mr Son (55) is ranked by Forbes as Japan’s second-richest man and has built Softbank from a small packaged software vendor in the early 1980s to a telecoms-centred group worth more than $40 billion through a series of risky acquisitions. – (Reuters)
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