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Sprint-SoftBank merger cleared by Committee on Foreign Investment in the US

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son hesse sprint softbank stock 1020
son hesse sprint softbank stock 1020

SoftBank and Sprint have agreed in principle to a deal with the US government that could remove the biggest regulatory roadblock in the path of the Japanese company's attempted $20.1 billion takeover, the Wall Street Journal reports. The agreement is designed to assuage fears that the acquisition could compromise national security; the WSJ's sources say that Sprint will have a four-member committee dedicated to the issue, with each member approved by the government and one of whom will sit on the carrier's board.

The government will also be able to veto equipment purchases made by Sprint, says the newspaper, with Sprint agreeing to replace some Chinese-made gear by the end of 2016 in a move that could cost over $1 billion. SoftBank and Sprint had already assured lawmakers that they would not use equipment from China in the existing Sprint network, and pledged to remove Huawei devices from Clearwire, which Sprint is in the process of acquiring. SoftBank uses gear made by Huawei and ZTE in its own networks.

A blow to Dish

News of the agreement will come as a blow to Dish Network, which has attempted to play off the national security issue as a major advantage to its own attempted buyout of Sprint. Chairman Charlie Ergen believes his company is more "culturally and geographically aligned" with Sprint than SoftBank. "We are an American company, and the modernization of Sprint's network will have to be done from the U.S," he said in an interview earlier this month. "You have to climb the towers here, and you'll have to have U.S. employees who speak English."

Sprint's pursuance of a deal with the government suggests that it hasn't been shaken by any such fears, and may favor SoftBank CEO Masayoshi Son's argument that his offer is more financially sound than Dish's $25 billion proposal. The WSJ says that the security deal is likely to be finalized with the government in days; the FCC is yet to give the acquisition the go-ahead, however, and Sprint's shareholders are due to vote on the buyout on June 12th.

Update: Sprint has confirmed that the two companies have received clearance from the Committee on Foreign Investment in the US.