With the board approving the buyout at 2.97 Sprint will get all but X shares at that price per the ridiculous agreement that forces the major partners to sell at that price even if it gets overridden somehow. Assume not the worst but a bad bad situation and Sprint has to pony up 4$ to all the share holders that were independent after lawsuits. I'm thinking that would add in around another 300 million, lets say another 50 for legal disputes and another 50 for disrupted merger cost savings.
Add in 4 billion in debt
Worst case scenario cost is 7billion total.
Currently that's 2.30$ per share it currently owns. Assuming we don't factor in cost savings of merger, incoming receipts from CLWR, competitive advantage of having a slew of bandwidth to deliver the blockbuster/dish attack strategy, no more wimax payments, better leverage on borrowing rates for the disgusting amount of debt, Iphone5b having TD-LTE, etc etc
How much should S be worth assuming the softbank deal goes through?
Its not 5.50 - 2.30 = 2.80 right?
There is additional considerations for the 500 million additional shares being generated to softbank. But I'm not sure how that flow chart of this company owns that company owns New Sprint.
Can someone point me in the right direction? I think its .5 billion new shares added to 3billion shares = use the new number of 3.5billion shares of which Softbank will own 70% of those shares.
(and quite frankly, i'm so confused that I'm thinking the 8billion infusion was to handle that 7billion cost and so actually , the company just increased the value of its stock by 1billion dollars if this merger goes through which would mean 5.25 + (1billion$/3billionshares is .33) = 5.58...which can't be right as this stock is sitting at its lowest possible level without factoring in any of the soft stats such as competitive advantage, blockbuster/dish strategy, etc.
ive asked that same questions here many times with zero answers..why?..because no one knows..why? because no one knows what numbers to start with. Right now you only can go by general assumtions being that S/SB was forced to buy CLWR earlier than they had planned by DISH spectrum approval by FCC. prior to this the street had an avg value of 5.30 pps or 7.33 for 55% averaged with around 3.60 post new issue or 3.60 value for your New Sprint BUT now you have to add in the added costs of the clwr deal which A. they had dept and cash and B. 4 billion to do the deal or so..im not a wizard but you could be looking at less than 3.00 pps on the new sprint..i'm thinking holding the shares priced now at 5.60 is a mistake..yes you get 7.33 for half but you will lose MORE than the amount over 5.60 you got on the diluted new shares..JMO
Zero answers because the answer to your question is complex and has a few variables (some of which you highlighted well). My recommendation is to wait until Q4 earnings. That should be a catalyst to reinforce your decision. Bottom line, risk is not on the stock going down. Double digits by EOY 2013.