Shanghai-based video streaming platform PPStream has reportedly (link via Google Translate) been purchased by iQiyi, the online video unit of Internet search giant Baidu, for around $350 million to $400 million. A Baidu spokesman would not confirm the reports, which have been circulating in Chinese media since the end of last month, but a statement by the head of rival video platform Youku-Tudou seems to confirm that a deal has indeed been struck:
“After the success and synergy created by the Youku Tudou merger, increasing consolidation was inevitable throughout the video industry. We are happy to see this purchase go forward, we expect this acquisition will further rationalize the industry and help reduce piracy in the sector,” said Youku-Tudou president Dele Liu in an email.
iQiyi launched in 2010 under the auspices of Baidu and from the beginning has focused on legally distributed, professionally produced media and entertainment content, which has led to the site being referred to as “China’s Hulu” (in fact, former investor Providence Equity Partner was also an investor in Hulu until exiting from the U.S. site in October).
Tudou previously offered mostly user-generated content, but after being purchased for $1 billion by Youku, the combined company has focused on signing content partnership deals. The drive toward legal content was prompted in part by last year’s crackdown on “inappropriate” material by the Chinese government.
Baidu bought out Providence’s controlling stake in iQiyi last November for an undisclosed amount. The timing of the deal seemed to suggest that Baidu made the purchase in response to Youku and Tudou’s August merger. At the time, Baidu chairman and CEO Robin Li said that Baidu planned to integrate iQiyi’s content into Baidu’s overall search and mobile services.
“Online video is a key strategic vertical for Baidu as user numbers and time-spend continue to increase expontentially, underscoring the tremendous potential in the sector,” said Li.
Acquiring PPStream would help boost iQiyi’s market share, which lags behind Youku-Tudou, China’s biggest video site. According to estimates by Analysys International, Youku-Tudou holds about 32.4 percent of China’s online video market, while its nearest competitor Sohu.com has 10.9 percent. iQiyi held just 6.7 percent of the market. The deal is also potentially a lifeline for PPStream, which has struggled to make a dent in China’s highly competitive online video industry.
Things fell apart spectacularly the last time T-Mobile USA was tied up in a potential merger transaction, but it doesn’t look like history will repeat itself this time around. According to a report from Bloomberg, MetroPCS shareholders voted today to approve a deal that would see the nation’s fourth and fifth largest wireless carriers merge.
Getting to this point hasn’t exactly been easy for the parties involved. Deutsche Telekom’s and MetroPCS’ respective boards originally gave the transaction its blessing in October 2012, but Deutsche Telekom had to improve its deal earlier this month (a move they denied for a while) due to pressure from some of Metro’s most prominent shareholders. Under the terms of the revised bid, Deutsche Telekom gets 74 percent stake in the combined carried, while MetroPCS shareholders get $1.5 billion in cash and a reduction of Metro’s post-merger debts.
All told, the tie-up will see some 9 million prepaid MetroPCS customers join the T-Mobile fold, but that’s only part of what the magenta-hued carrier stands to gain. More importantly, T-Mobile USA will gain access to Metro’s spectrum holdings which should help the carrier in its bid to roll out a nationwide LTE network. Frankly, T-Mobile needs all the help it can get — it fired up LTE service in seven cities back in March, and rivals AT&T and Verizon Wireless have had significant head starts when it comes to lighting up and managing LTE networks.
While it works to light up LTE in more markets, T-Mobile has also keenly rebranded itself as the “Uncarrier” by doing away with multi-year contracts and making price plans more transparent. It’s a savvy move from a carrier that can’t quite compete on the same level as its rivals (at least when it comes to LTE) — the company is trying to frame carrier value not in terms of network speed but how fairly it treats its customers. That’s unlikely to change now that T-Mobile and MetroPCS have been given shareholder approval to merge, but combining those sensibilities with a more pronounced LTE presence could do wonders for the combined carrier.
A dramatic turn of events in the ongoing story of U.S. carrier consolidation: Dish Network is launching a $25.5 billion bid for number-three carrier Sprint, amounting to $17.3 billion in cash and $8.2 billion in stock. If successful, the deal would effectively snatch Sprint out of the hands of Japanese carrier Softbank, which in October announced that it would pay $20.5 billion for a 70% stake in Sprint.
The deal would see pay-TV giant Dish pay $4.76 per share for Sprint; the carrier closed trading at $6.22 on Friday, April 12, but the news is sending Sprint stock up. In pre-market trading it’s up by over 15% after slumping last week.
The deal, as Dish notes in an SEC filing made this morning, will give Dish a much larger user base and revenue profile (if more burden in the form of a capital-intensive network). Sprint currently has 47.5 million subscribers, compared to 14.2 million for Dish. The idea will be that Dish will cross-market its pay-TV services to Sprint’s wireless subscribers, and market wireless services to its pay-TV subscribers. Quad-play is alive and well!
It’s an aggressive move by the pay-TV provider to get its hand deeper into the wireless game as smartphones and tablets become ever-more popular, and mobile data becomes many users’ default channel for browsing online, accessing apps, watching video and more.
“The DISH proposal clearly represents superior value to Sprint shareholders, including greater ownership in a combined company that is better positioned for the future with more spectrum, products, subscribers, financial scale and new opportunities,” chairman Charles Ergen said in a statement.
The Softbank bid has had the mark of approval from Sprint. The announcement in October was made with significant pomp and circumstance with an event in Japan at which Softbank’s CEO Masayoshi Son extolled the virtues of synergies and economies of scale between the two companies, specifically around LTE and the fact that both are developing services on the same frequency. At the same event, Dan Hesse, Sprint’s CEO, was also very supportive:
“This is pro-competitive and pro-consumer,” he said at the time, because it helps fight the “AT&T and Verizon duopoly.” There is also strength in being number-three together: “When we look at what Softbank has accomplished as the number-three carrier in Japan, we can learn something from that,” he added.
In contrast, Dish’s offer has a decidedly more unsolicited look about it:
“We would be pleased to discuss our plans for the combined company and we are available at any time to meet with the Sprint Board, management and advisors to answer any questions about our proposed merger,” Charles Ergen writes. “We are confident that the Sprint Board will share our view that this proposed merger offers an excellent opportunity for the equity holders of Sprint to realize a superior value for their shares that is unavailable to them under the SoftBank proposal.”
Sprint would need to pay a $600 break fee if it backed out of the Softbank merger. Ergen told the WSJ, whih first reported the news today, that Dish would cover that cost in its offer.
Dish has been circling around different wireless assets for some time now. Just last week, it was reported that Dish wanted to merge with T-Mobile USA, which itself is merging with MetroPCS. Dish is also eyeing up Clearwire, the wireless carrier in which Sprint has also been an investor.
But in the WSJ, Ergen noted that the Sprint deal appeared more likely than the Clearwire bid. Speaking in the past tense (an implication that the door is now closed on Clearwire?) he said that the “deck was stacked against us” when it came to Clearwire because of what WSJ refers to as “contractual obligations.” This has partly to do with Clearwire shareholders that are trying to force Sprint to increase its own buyout offer of Clearwire, which is tied up with debt financing. All the same, Dish notes in one of its SEC filings today that were both deals to go through, it would create a business that generated in 2012 (on a pro-forma basis) some $50 billion in revenues and $9.4 billion in EBITDA.
It’s important for Dish to make a move one way or the other: it owns wireless spectrum — 40 MHz in the 2 GHz band — but no network on which to run services.
On the other hand, if all of these attempts fall through, it remains a takeover candidate itself, partly because of the spectrum shortage among bigger carriers looking for more airwaves for their own fast-growing mobile data services. AT&T earlier this year was mentioned as one possible Dish acquirer.
Full announcement below.
DISH Network Proposes Merger with Sprint Nextel Corporation for $25.5 Billion
U.S. technology leader with track record of disrupting entrenched incumbents presents superior alternative to pending SoftBank proposal – DISH offers more cash and a greater ownership stake
Sprint shareholders would receive $7.00 per share, consisting of $4.76 in cash and stock representing approximately 32% in a company with a significantly enhanced strategic position
Creates an industry-leading spectrum portfolio and the only company that can offer customers a fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services
Delivers substantial synergies and growth opportunities estimated at $37 billion in net present value, including an estimated $11 billion in cost savings
ENGLEWOOD, Colo.–(BUSINESS WIRE)–DISH Network Corporation (NASDAQ: DISH) today announced that it has submitted a merger proposal to the Board of Directors of Sprint Nextel Corporation (NYSE: S) for a total cash and stock consideration of $25.5 billion. The DISH proposal clearly represents superior value to Sprint shareholders, including greater ownership in a combined company that is better positioned for the future with more spectrum, products, subscribers, financial scale and new opportunities.
DISH is offering Sprint shareholders a total consideration of $25.5 billion, consisting of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7.00 per share, based upon DISH’s closing price on Friday, April 12, 2013. This consists of $4.76 per share in cash and 0.05953 DISH shares per Sprint share. The cash portion of DISH’s proposal represents an 18% premium over the $4.03 per share implied by the SoftBank proposal, and the equity portion represents approximately 32% ownership in the combined DISH/Sprint versus SoftBank’s proposal of a 30% interest in Sprint alone. Together this represents a 13% premium to the value of the existing SoftBank proposal.
“The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal,” said Charlie Ergen, Chairman of DISH Network. “Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly-enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.”
Mr. Ergen continued, “A transformative DISH/Sprint merger will create the only company that can offer customers a convenient, fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services. Additionally, the combined national footprints and scale will allow DISH/Sprint to bring improved broadband services to millions of homes with inferior or no access to competitive broadband services. This unique, combined company will have a leadership position in video, data and voice and the necessary broadband spectrum to provide customers with rich content everywhere, all the time.”
The proposed combination will result in synergies and growth opportunities estimated at $37 billion in net present value, including an estimated $11 billion in cost savings.
DISH has provided additional information regarding the proposed merger via a dedicated transaction microsite that can be accessed at http://www.CompleteDishSolution.com.
Barclays is acting as financial advisor to DISH.
Following is text of the letter that DISH sent to Sprint Nextel Corp. Board of Directors on April 15, 2013.
Board of Directors
Sprint Nextel Corporation
6200 Sprint Parkway
Overland Park, KS 66251
Attn: James H. Hance, Jr., Chairman of the Board
On behalf of DISH Network Corporation (“DISH”), I am submitting this proposal for a merger between DISH and Sprint Nextel Corporation (“Sprint”). Our proposal provides Sprint shareholders with a superior alternative to the pending SoftBank Corporation (“SoftBank”) proposal. It provides more cash and affords your shareholders the opportunity to participate more meaningfully in a combined DISH/Sprint, which will benefit from a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.
We are offering Sprint shareholders a total consideration of $25.5 billion, consisting of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7.00 per share, based upon DISH’s closing price on Friday, April 12, 2013. This consists of $4.76 per share in cash and 0.05953 DISH shares per Sprint share. The cash portion of our proposal represents an 18% premium over the $4.03 per share implied by the SoftBank proposal, and the equity portion represents approximately 32% ownership in the combined DISH/Sprint versus SoftBank’s proposal of a 30% interest in Sprint alone. Together this represents a 13% premium to the value of the existing SoftBank proposal.
Our proposal provides a highly-compelling and unique opportunity for Sprint shareholders. We are offering an ownership interest in a combined company with a comprehensive product and services suite, a significantly enhanced subscriber base, considerable financial and operating scale, as well as a spectrum portfolio that would lead the industry. As a result, this merger creates sizable cost and CAPEX savings and promises extensive new revenue opportunities.
Leveraging both companies’ existing assets and expertise, we will be the only company able to offer a fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services to meet rapidly evolving customer preferences. The new company’s assets will immediately establish national cross-platform leadership and will position the company to deliver innovative services while expanding our collective subscriber base.
The proposed combination will result in synergies and growth opportunities estimated at $37 billion in net present value. This includes an estimated $11 billion in cost savings, representing approximately $1.8 billion in annual run-rate cost synergies by the third year after closing.
Further, our combined national footprints and scale will allow us to efficiently develop our joint spectrum assets to provide advanced services to the millions of homes with inferior or no access to competitive broadband services.
I am proud of the company we have built and believe we will be an excellent partner to Sprint. Like Sprint, DISH possesses a strong tradition of innovation and industry leadership. We created the third largest pay-TV provider while competing with incumbent cable monopolies and other entrenched operators. DISH has consistently led our industry in service and technology delivery with award-winning innovations like Hopper® with Sling®. Our history of value creation is outstanding. Investors in our 1995 initial public offering have enjoyed a total return of 27 times their original investment, significantly outperforming the broader markets and our peers. We also have a proven track record of responsible capital management.
DISH has significant experience structuring and consummating strategic transactions and only needs to complete confirmatory due diligence, which we believe can be done quickly with your cooperation. We have examined your merger agreement with SoftBank and we would be prepared to execute a definitive merger agreement on substantially similar terms and conditions. Though not a condition of our proposal, we anticipate that the pending transaction with Clearwire would be completed. We are confident that we can obtain all necessary approvals within a reasonable timeframe.
We intend to fund the $17.3 billion cash portion of the transaction using $8.2 billion of our balance sheet cash and additional debt financing. We have a proven track record in raising capital to fund strategic initiatives and have received a Highly Confident Letter from our financial advisor, Barclays, confirming our ability to raise the required financing.
We would be pleased to discuss our plans for the combined company and we are available at any time to meet with the Sprint Board, management and advisors to answer any questions about our proposed merger. We are confident that the Sprint Board will share our view that this proposed merger offers an excellent opportunity for the equity holders of Sprint to realize a superior value for their shares that is unavailable to them under the SoftBank proposal.
While it would have been our preference to have confidential discussions regarding this proposed merger, your existing agreement with SoftBank and the impending deadlines associated with your shareholder vote, will compel us to confirm our intentions publicly. We look forward to hearing from you.
Very Truly Yours,
DISH Network Corporation
Sprint Nextel and SoftBank have pledged not to use equipment from Chinese telecommunications company Huawei Technologies after they merge. Congressman Mike Rogers, a Republican state representative from Michigan who leads the House Intelligence Committee, said today that the two companies told him they would not use gear manufactured by Huawei in their networks.
The Chinese company has repeatedly had to fend off charges of espionage in the past. Though an 18-month White House-ordered review cleared Huawei of spying for China, concerns over Chinese cyber-espionage have ramped up recently. Back in October, the House Intelligence Committee said in a report that equipment from Huawei and its main domestic rival ZTE can potentially give an opening for Chinese intelligence services to use U.S. telecommunications networks for spying. More recently, a provision included in the funding bill signed into law by President Barack Obama this week requires U.S. federal law enforcement agencies to get approval before buying information technology systems made by Chinese companies.
“I have met with SoftBank and Sprint regarding this merger and was assured they would not integrate Huawei into the Sprint network and would take mitigation efforts to replace Huawei equipment in the Clearwire network,” Rogers said in an emailed statement to the Washington Post. Sprint owns a share of Clearwire, which currently uses Huawei gear at the edges of it network, with its core network supplied by U.S. companies Cisco Systems and Ciena.
In response, Huawei spokesman William Plummer told the Washington Post “if government approval of the transaction is somehow contingent on an agreement to restrict purchase of equipment from any vendor based on the flag of heritage, then it is a sad day for free and open global trade, and it does nothing to secure the network. Everyone is global and every company faces the same cyber-challenges.”
Sprint Nextel, the third largest U.S. carrier, and Tokyo-based Softbank are currently awaiting approval for a proposed $20.1 billion merger , and are being reviewed for national security implications by the Federal Communications Commission, the Justice Department, and the Committee on Foreign Investment in the United States.
Read the original here: Sprint Nextel and SoftBank Agree Not To Use Huawei Equipment After Merger
We’ve known for some time that publishing behemoths Penguin and Random House were to merge, thus creating a truly colossal book publisher. Well, that deal has been given one more seal of approval, with the US Department Of Justice giving the greenlight to the deal.
Random House’s parent company – German mass media corporation Bertelsmann – and Pearson confirmed the go-ahead earlier today, with the DoJ officially closing its regulatory investigation, with no conditions stipulated.
However, the deal isn’t yet complete – this is just one step in the finalization of the merger, and it has yet to be ratified by the European Commission, the Canadian Competition Bureau and other authorities around the world.
The publishing giants first announced the plans back in October last year, and it could easily be October this year before the final rubber-stamp is given – the two companies state that they fully expect the transaction to be finalized some time in the second half of 2013.
The merger includes all of Random House and Penguin Group’s various publishing units in the US, Canada, the UK, Australia, New Zealand, India and South Africa, as well as Penguin’s China operations and Random House’s Spain and Latin American publishing houses.
Assuming the deal is seen through to completion, Bertelsmann will own a majority share in the newly formed ‘Penguin Random House’ with 53%, while Pearson will own the remaining 47%.
Feature Image Credit – KAREN BLEIER/Getty
Read more from the original source: Penguin and Random House merger moves one step closer, as the US Department of Justice gives its approval