SK Telecom In Talks To Buy Sprint

Discussion in 'Wall St. News' started by Musashi, Jul 15, 2008.

  1. Musashi


    SK Telecom In Talks To Buy Sprint -CNBC's Faber
    Last update: 7/15/2008 3:50:48 PM
    (Updates with analyst comments that a deal with SK Telecom makes sense and stock updates.)

    By Roger Cheng

    NEW YORK (Dow Jones)--SK Telecom Co. (SKM) is in talks to acquire Sprint Nextel Corp. (S), CNBC's David Faber reported Tuesday, citing people familiar with the matter.
    Participants in the talks say "any agreement would at best be weeks away," according to Faber. Private equity firms would need to contribute cash for SK Telecom - which is smaller than Sprint in market value - to pay for the buy.
    A spokesman for Sprint declined to comment. An SK Telecom spokesman could not be reached for comment.
    Sprint shares rose 7.9% to $8.91 recently. SK Telecom shares were down 1.9% at $20.69.
    The interest isn't unprecendented. In November, SK Telecom, the largest wireless carrier in South Korea, partnered with Providence Equity Partners LLC to propose a $5 billion investment in the company, which Sprint turned down. At the time, SK Telecom said it understood both the near-term issues and long-term potential of the business.
    Sprint has been the target of rumored takeovers, with the last being Deutsche Telekom AG (DT). But Walter Piecyk, an analyst at Pali Research, believes a deal with SK Telecom makes more sense because it would represent a new entry for SK Telecom. The parties would avoid the mess that Deutsche Telekom would face in merging T-Mobile USA with Sprint.
    The size of the deal would greatly complicate getting funding, since the capital markets aren't particularly eager to make major bets. In addition, Sprint may face debt convenant issues next year, particularly as its business has deteriorated over the last several quarters.
    SK Telecom's last go-around with Sprint involved the proposal to install former Nextel CEO Tim Donahue, who maintains a relationship with the South Korean company. Piecyk noted that Donahue has the unique ability to clean up and turn around the Nextel business.
    While Sprint Chief Executive Dan Hesse has done a good job turning the customer care and billing services around, he still hasn't laid out a plan for growth, the analyst said.
  2. bespoke


    not true