The Japanese mobile carrier Softbank announced Monday it will purchase a 70 percent majority stake in the US mobile phone company Sprint Nextel for $20.1 billion, the biggest foreign purchase ever by a Japanese company.
"This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward," said Sprint Chief Executive Dan Hesse.
The newly created company will be called New Sprint, and the deal comes with a variety of perks for both companies.
Softbank, Japan’s third-largest mobile phone carrier will now have a presence in the larger and still growing US mobile phone market. In Japan, the mobile phone industry has been on the decline for the past five years.
The agreement will also transform Softbank into one of the largest telecom groups in the world with approximately 90 million subscribers when combined with Sprint.
According to reports, part of the deal includes billions of dollars up front for Sprint to build out its 4G network and acquire peer companies, which will put the US’s third-largest cell phone carrier in a better position to compete with its much larger rivals Verizon Wireless and AT&T.
The deal is expected to be completed by mid-2013.