Obviously some people are expecting Softbank to pay a premium price for their shares.
Analysts are all over the map on this, with "target prices" ranging from $6-8. Yes, that's higher than $5.60, but how long will you be waiting for that premium to develop? The price listed by Sprint in its press release announcing the deal was $7.30/share. That's for 70% of the company, meaning one-third of shareholders are expected to hang in. So if you tender, there's a chance not all your shares will be accepted at the offering price, even assuming things go along smoothly.
But is this how it will go down? Let's look at the deal. (That link is to the original news release on the deal, from Sprint. So open it in a new window and follow along.)
The deal is that Softbank first gives a company called "New Sprint" $3.1 billion in new convertible bonds. Sprint has already bought the majority stake in Clearwire (CLWR), so those expecting a "white knight" to appear and take them out at a higher price are out of luck. And this first piece of deal-making is, in my view, a key to understanding the deal. Some people will get a good price, at some point, but not everyone will.
Only after all approvals are given does the $17 billion come in from Japan. Of that, $4.9 billion will buy new shares of New Sprint, at $5.25 each. The remaining $12.1 billion will go to existing stockholders, in exchange for 55% of current common. So you only get half a slightly better than 50-50 shot at getting that $7.30. You're just as likely to get a New Sprint share, worth $5.25. And if you have an equity award, kid, it's coming in the form of New Sprint common - $5.25.
So let's assume all this goes through. Time is money, you know. There's an opportunity cost in hanging in there, kid. But assume you hang in anyway. What Softbank is offering is $7.30 cash for half your current holdings, give or take, and stock worth just $5.25 for the rest.
Still want to stay? Good luck, then. Me, I'd still sell fast and run like I stole something. Remember, analysts are mostly in the business of selling stock, not making you money. They sell propositions on the claim they are acting in your interest, but who's paying them?
I can understand your feelings if you got into Sprint at $20/share, or $15, or even $10. You would like to break even. You would like to believe that the $5.25 shares you're getting are going to become golden once the full investment comes through, and that the $7.30 is a dividend you can put in your pocket, a fat premium over the current price.
But how fast does any deal in telecommunications get done? And how often are terms adjusted based on a stock's action while the deal is pending?