U.S. network carrier Sprint Nextel Corporation(NYSE:S) Japanese cellphone company Softbank have reached an agreement under which Softbank will buy a 70 percent stake in Sprint for $20 billion, according to a report on Sunday citing sources.
The deal is expected to be announced on Monday morning.
CNBC said that while the details of the deal are still being worked out "Softbank will buy $8 billion worth of shares directly from Sprint and tender for another $12 billion worth of the shares from existing holders."
The offer price for Sprint's shares are at $7.30 a share, a substantial premium to its current price of about $5.70 each.
The deal has been structured in such a way so that it would not require any voting from shareholders.
"The equity being purchased directly by Softbank includes a $3 billion convertible bond purchase that is exercisable at $5.25 and will be sold well before the deal closes, in order to provide funds for Sprint as it moves towards purchasing the roughly 52 percent of Clearwire Corporation(NASDAQ:CLWR) it does not already own," the report said.
Shares of Sprint have been rising recently and observes and analyst have been watching out for the company to make some acquisitions.
The Softbank deal has come as some surprise to the market, as they feel that any move by Sprint now to acquire any other network carrier would be subject to Softbank's approval, which now has a controlling stake in it.
However Sprint is expected to make an announcement to acquire more stake in Clearwire Corp to gain management control of the company.