OLATHE, Kan. (CN) - Sprint Nextel is selling itself too cheaply through an unfair process to SoftBank, in a cash and stock swap worth more than $3.1 billion, shareholders say in a class action.
Lead plaintiff Dennis J. Seltzer says the 3-step process includes $3.1 billion in cash, a prorated stock swap valuing Sprint common stock at $7.30 a share, and the option for SoftBank to buy 54.6 million more shares of "New Sprint" at $5.25.
"The board owes Sprint's public stockholders the well-known duty to maximize stockholder value in connection with a change-in-control transaction," according to the complaint in Johnson County Court.
"However, they completely failed this duty here. Rather than conduct an auction of the company or other market check to determine the highest available price for Sprint, in the span of approximately one week the board quickly abandoned its long-standing plan to grow through strategic acquisitions and instead sold control of Sprint to SoftBank for an inferior price in the sweetheart transaction that favored SoftBank's interests."
The plaintiffs claim the Sprint board included a variety of "defensive measures" to make sure SoftBank took over the company. Those measures include a bond that will increase the cost of acquiring Sprint to a competitive bidder, a $600 million termination fee, a $75 million cost reimbursement requirement and giving SoftBank the right to match - not exceed - any other offer.
Sprint had more than 56 million customers at the end of the second quarter in 2012 and was the first national carrier to offer 4G Internet service, according to the company website.
The class consists of all Sprint common stock holders as of Oct. 15, 2012.
It asks the court to void the merger and require Sprint to undertake a sales process that maximizes shareholder value. It is represented by Thomas Buchanan, with McDowell, Rice, Smith & Buchanan, in Kansas City, Mo.Follow @@joeharris_stl
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