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Japan’s Softbank Angling to Buy Sprint — and Maybe Clearwire, Too

The Exchange

Sprint Nextel (S) might have found a solution to its problems, and it doesn't even involve the telecom company spending billions of dollars on a deal.

Multiple reports Thursday said the company is in talks to sell most or all of itself to Softbank of Japan, which is making a giant push into the U.S. if so. Shares of Sprint have been languishing under $6 since October 2008, but they were doing their best to get through that mark. In premarket trading, the stock was up 18.9% to $5.99, though once the regular session opened the gain fell back to 13.7%, putting Sprint at $5.72.

Meanwhile, CNBC was reporting that for good measure Softbank was angling to involve broadband network owner Clearwire (CLWR), a company where Sprint owns a large stake, in its dealings as well. Shares of Clearwire were jumping 26% to $1.64.

The Sprint-Softbank reports, appearing in The Wall Street Journal, The New York Times and Bloomberg, come just days after a new set of rumors emerged about Sprint's future that started when Deutsche Telekom reached an agreement to combine its T-Mobile unit with prepaid cell carrier MetroPCS (PCS).

Sprint has long been viewed as a staggered rival to Verizon (VZ) and AT&T (T) -- staggered being relative, since Sprint has sales that will probably exceed $35 billion this year -- in the U.S. wireless market, where it holds the No. 3 position. The company, and its network, hasn't been the same since its more than $30 billion acquisition of Nextel in the mid-2000s. With a Softbank deal, it would be able to offload those worries about keeping up with the latest networks onto a foreign owner.

Once the T-Mobile and MetroPCS deal was reached, speculation began immediately about what Sprint would do, including whether it would be an acquirer, perhaps of a company like Leap Wireless (LEAP). It had earlier this year wanted to take over MetroPCS, but the Sprint board wouldn't support the move.

A buy wouldn't be cheap for Softbank, though. The WSJ said the value of the agreement being discussed likely would be above $12.81 billion, while Bloomberg said Softbank might be planning to pay more than $19 billion for the stake. As noted in the reports, a possible agreement will involve only the majority of Sprint, rather than all of it.

Based on Wednesday's close and Sprint's other financials, a partial deal appears to be the direction Softbank is in fact heading, if the reported numbers are close. Sprint's market cap itself was $15.12 billion. The company also has cash and cash equivalents of $6.76 billion, according to FactSet, and debt of $21.26 billion. That gives Sprint an enterprise value of $29.62 billion (excluding cash).