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Bernstein suggests the terms of Sprint's (S +0.1%) complex deal with SoftBank leave shares...

  • Tuesday, October 16, 2012, 3:12 PM ET
    Bernstein suggests the terms of Sprint's (S +0.1%) complex deal with SoftBank leave shares undervalued at current levels: the firms points out that if the newly capitalized Sprint is worth $6/share, current shares are worth $6.72 (~$1 above present levels) after accounting for the 55% of current shares that will be sold for $7.30, and the 45% that will be converted. SA's Ted Barac also sees a buying opportunity, particularly since the deal will strengthen Sprint's balance sheet while reducing its float. (more)
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This news story has 8 comments:

  •  
    I bought more yesterday for these reasons: 1) the phone suppliers want more competition to protect themselves from the two Goliaths; like the oil and insurance companies, T and VZ go easy on each other because they both have to stay in parity less there be a charge of monopolizing. 2) More rapid LTE roll out will accelerate S revenue growth as well as a more diverse product line will lead to profitability and sustain it; 3) less debt will reduce investor risk increasing profits and share value as will the reduction in float; 4) Son has a very solid reputation for reading markets and opportunities. I think $10 to $12 by July 1, 2013 is a decent bet.
    16 Oct 2012, 03:52 PM Reply Like
  •  
    To GOD willing. I'll be very happy $8/share.....hope you are right.
    16 Oct 2012, 05:39 PM Reply Like
  •  
    what is the implication of this Softbank buying sprint to a regular shareholder ? Could anyone explain in lay mans term.
    16 Oct 2012, 09:47 PM Reply Like
  •  
    If you have 100 shares of Sprint, 55 of them will be purchased by SoftBank for $7.30/share, while the remaining 45 will be converted into shares of the new company.

    Right now, those remaining 45 shares are only being valued by the market at $3.73, not counting any built-in risk of the deal not going through.
    17 Oct 2012, 09:24 AM Reply Like
  •  
    Just so i'm clear on this, why would anyone hold Sprint stock until after the new shares are issued if the current share price @5.73 is worth a little more than the arrangement you mention above? Using your example: 55X7.30 = 401.50, 45X3.73 = 167.85; total = 569.35. Compare this with current price of 100X5.73 = 573. This is just simple math, right? Also, how likely is it the market will value the 45 share stake higher than 3.73 now that Sprint will have control of Clearwire, or could this lower the value?
    17 Oct 2012, 11:50 PM Reply Like
  •  
    Does it mean that the sprint price will not go over 7.30 until this softbank deal is completed...TY Eric
    19 Oct 2012, 02:01 AM Reply Like
  •  
    I don't know either, maybe the brokers will serve as middle men who will ask us if we would like to sell or hold on a first serve basis. Brokers normally handle all tender offers. Good question!
    17 Oct 2012, 09:09 AM Reply Like
  •  
    All I know is people I know who have Sprint love it. Unlimited calls and texts. What's not to like? Seems undervalued for sure.
    17 Oct 2012, 12:29 PM Reply Like
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