SoftBank Stands to Make $4 Billion if Sprint Deal Unravels

SoftBank said it expects to complete its acquisition of Sprint Nextel without fighting off Dish Network’s $25.5 billion cash-and-stock bid with a sweeter offer. But the Japanese company is looking at a profit of about $4 billion if the original deal doesn't go through.

SoftBank said that it was well along in getting approvals for buying the U.S. cellphone provider and expected to complete the original deal on July 1. SoftBank is considering several responses to the offer from U.S.-based Dish, including improving or otherwise adjusting the Japanese company's original $20.1 billion agreement to acquire 70% of the third-largest U.S. carrier, a person familiar with SoftBank's thinking said. SoftBank, Japan's third-largest mobile operator, has reason to play it cool with Sprint. Under the six-month-old merger agreement, SoftBank would receive $600 million if Sprint decides to back out. In addition, SoftBank has invested $3.1 billion in a convertible bond that can be converted at $5.25 a share. If Dish's about $7-a-share offer is accepted, SoftBank stands to gain about $1 billion from the bond. Finally, SoftBank hedged the remaining $17 billion it owes Sprint shareholders on completion of the deal at ¥82.20 to the dollar. The yen has weakened sharply since November, with the dollar fetching ¥97.86 as of Tuesday evening in Tokyo. At that rate, SoftBank stands to gain another $2.5 billion in currency gains.