Deals from Hell Refuse to Die

Focus: MARKETS

Howard Gold Image Howard Gold Founder & President, GoldenEgg Investing

The $20 billion Softbank-Sprint deal shows that the Great Recession had little ultimate effect on either magnates' caution or their egos, writes MoneyShow's Howard R. Gold, also of The Independent Agenda.

Remember the great old days of M&A? The days when marquee CEOs with egos the size of Alaska lit up the TV screens with their latest game-changing deals? And when breathless reporters walked away with arms full of awards and fat book contracts for chronicling every twist and turn?

That, of course, was before some of the most spectacular deals came crashing down to earth. Exhibit A, B, and C: AOL-Time Warner (AOL), which was to mergers and acquisitions what Gigli or Showgirls were to movies.

But just when you thought those halcyon days were over, Japan’s Softbank announced it would take control of Sprint Nextel (S), a perennial money loser that ranks a distant third among US wireless carriers behind Verizon (VZ) and AT&T (T).

Unveiled last week in Tokyo by Softbank’s billionaire chairman Masayoshi Son and Sprint’s CEO Daniel Hesse, the complex deal would cost Softbank $20 billion in borrowed money and still leave it with only 70% control; the rest of Sprint’s stock would be publicly traded. It would be the biggest purchase ever of a US company by a Japanese-based firm, topping the 1989 landmark acquisition of Rockefeller Center by Mitsubishi Estate.

The money would help Sprint pay off a mountain of debt and gear up for war against the wireless giants.