SoftBank Corp.’s $20.1 billion takeover of Sprint Nextel Corp., the third-largest U.S. wireless carrier, is close to passing a national-security review by U.S. officials, according to a person familiar with the matter.
The Committee on Foreign Investment in the United States is close to advising SoftBank it has no unresolved national-security concerns, said the person, who asked not to be named because the information hasn’t been announced. CFIUS, an interagency panel that scrutinizes acquisitions by international buyers, and the two companies reached an agreement following a thorough review of the proposed transaction, said the person.
The agreement, which may be announced as soon as Wednesday morning, would be a key hurdle in a deal that gives Tokyo-based SoftBank control of Sprint, said the person. Holly Shulman, a CFIUS spokeswoman, declined to comment, as did a SoftBank representative. Scott Sloat, a Sprint spokesman, didn’t immediately return a call for comment.
Dish Network Corp., which has made a $25.5 billion counteroffer for Sprint, has said allowing SoftBank to control a U.S. phone network would compromise national security. SoftBank uses some network gear made by Chinese manufacturers, and Sprint’s joint-venture partner Clearwire Corp. has Huawei Technologies Co. equipment in part of its network. Both carriers have said they plan to discontinue purchases and dismantle network equipment provided by Chinese companies.
Key terms of the agreement include the appointment of a national-security director to the board and provisions that would allow the government to approve non-U.S. vendors, the person said. The agreement also has a provision to remove equipment from Clearwire’s network made by vendors that haven’t won national-security approval, if Sprint concludes a separate transaction to acquire full ownership of Clearwire.
SoftBank has also agreed to separate the operations of a small subsidiary company that would handle classified government work under a related national-security agreement, the person said.
SoftBank has said it’s open to relieving national-security concerns by letting the U.S. government have veto power over one nominee on Sprint’s board. The SoftBank transaction is also under review by the Federal Communications Commission.
Last week, Sprint said it had received the final necessary state regulatory approvals for the SoftBank merger.
Dish has urged the FCC to delay any action on its review of the SoftBank deal. Sprint’s future is “unsettled” while the company considers the Dish offer, Dish said in a filing in April.
Dish has raised about $2.6 billion in a bond offering managed by Barclays, Jefferies Group, Macquarie Group and Royal Bank of Canada. It tapped the same banks, along with Bank of Nova Scotia, for $9.3 billion in loans.