SoftBank gains $12bn as Sprint's stock soar

Feb 12, 2020 | News On Japan

Feb 12, 2020 (Nikkei) - A U.S. federal judge on Tuesday ruled in favor of the $26 billion merger between wireless carriers T-Mobile and SoftBank Group-owned Sprint, giving the Japanese conglomerate a much-needed boost after a series of investment flops.

The court decision, which came about six months after the acquisition was approved by the Department of Justice and the Federal Communications Commission, rejected a collective antitrust lawsuit by 13 states including New York and California, as well as the District of Columbia, which demanded an injunction on the transaction.

Sprint surged over 70% in morning trading Tuesday, boosting the value of SoftBank's 84% stake by $12 billion.

The legal win marks a likely end to years of uncertainty on Sprint for SoftBank, which had seen a merger with larger competitor T-Mobile as its plan "from day one" when it acquired the U.S. carrier in 2013.

Many analysts had warned that if the merger could not go ahead, Sprint may not survive in the competitive, capital-intensive wireless services market -- a view cited by Judge Victor Marrero as part of his decision in favor of the acquisition.

"The overwhelming view both within Sprint and in the wider industry is that Sprint is falling farther and farther short of the targets it must hit to remain relevant as a significant competitor," the judge wrote.

The transaction, if finalized, will also give SoftBank some relief from its capital troubles as the Japanese conglomerate struggles to fundraise for its venture capital vehicle Vision Fund 2, amid investor skepticism following the fallout of costly SoftBank bets including in WeWork.

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