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Japan's Softbank Agrees to Buy 70 Percent of Sprint for $20.1 Billion

Softbank's plan to acquire a majority stake in Sprint is a done deal, and it's even bigger than the rumors suggested. While the initial whispers pegged Sprint's selling price at anywhere from $12 billion to $19 billion for a 70 percent stake in the company, the final agreement topped even the highest estimate, with Softbank shelling out $20.1 billion in exchange for a controlling interest.

Of that $20.1 billion number, $12.1 billion will be used to buy 55 percent of the existing Sprint stock at $7.30 each, well above the current $5.73 trading price. The remaining $8 billion will be used to buy newly issued shares at $5.25 that will both infuse cash into the American business as well as leave Softbank with a 70 percent stake in "New Sprint," which will hold a 100 percent stake in the existing Sprint business.

The boards of the two companies have agreed to the acquisition, but federal regulators and Sprint stockholders still need to sign off on the plan. The wedding could go sour for several reasons, which would result in termination fees traveling in one way or another. If Softbank can't acquire the necessary funding to seal the deal, it will have to fork $600 million over to Sprint; Sprint has to give Softbank the same amount if the No. 3 carrier gives the Japanese company the cold shoulder to accept a buyout deal from another company. Finally, if Sprint shareholders nix the deal, Sprint owes Softbank $75 million.

Sprint CEO Dan Hesse will remain the CEO of New Sprint. Assuming everything goes well, the two companies expect the acquisition to be finalized by the middle of next year.

Now, it remains to be seen whether Softbank plans to swoop in and try to snap up MetroPCS from underneath T-Mobile's nose, as has been rumored. Sprint was rumored to be interested in T-Mobile counter-offer before the Softbank acquisition news, and Reuters reports that Softbank could be interested in furthering the offer.

via Sprint and TechCrunch