By Mari Saito and Sinead Carew
TOKYO/NEW YORK (Reuters) - Japanese mobile operator SoftBank Corp said it agreed with Sprint Nextel Corp to raise its offer for the U.S. wireless carrier to $21.6 billion from $20.1 billion, as it fights off a counter bid by Dish Network Corp.
SoftBank's amended offer, Japan's biggest outbound deal, won the backing of hedge fund Paulson & Co, Sprint's second-biggest shareholder, which had earlier supported the Dish bid. Paulson said it would vote all its shares in favor of SoftBank's improved offer.
Under the new deal, SoftBank will buy shares from current Sprint shareholders at $7.65 each, up from the previous offer of $7.30 per share. The Japanese firm, led by billionaire founder Masayoshi Son, will increase its cash injection to Sprint shareholders to $16.6 billion, up by $4.5 billion, and will end up with 78 percent of Sprint, up from 70 percent in its previous bid, the companies said in a statement on Tuesday.
The revised agreement came a day before Sprint shareholders were due to vote on SoftBank's offer, which is up against a rival bid from U.S. satellite TV provider Dish Network worth $25.5 billion. [ID:nL2N0EM19H] That meeting has been put back until June 25.
In a brief statement, Dish said it "will analyze the revised SoftBank bid as we consider our strategic options," adding it still believes Sprint has tremendous value.
A person familiar with Dish's thinking said the company was unlikely to go away after the sweetened SoftBank offer. "They're moving the deckchairs around. It doesn't represent meaningful incremental value for Sprint shareholders," said the person, who asked not to be named. "SoftBank's revised offer is probably less than people would have expected them to come back with."
Charlie Ergen, Dish's billionaire chairman known for launching fierce takeover battles, said last month he could take on a bidding partner and even sell off non-core assets to pay down debt if a bidding war with SoftBank became too pricey.
WAIT AND SEE
A major Sprint shareholder said they would wait until Dish reacts before making any decisions. "SoftBank's bid is now superior to Dish's, but we have to see how it plays out. We have two very clever guys who want the same asset," said the person who didn't want to speak publicly on the matter.
The source noted SoftBank's cash increase looked good, and said that a smaller percentage of public shares remaining - not held by SoftBank - could help boost those shares.
SoftBank's Son said the new deal "delivers more upfront cash to Sprint stockholders, while still achieving our goal of creating a well-capitalized Sprint that is better positioned to bring meaningful competition to the U.S. market."
Son, an unusually aggressive risk-taker in a cautious Japanese corporate culture, wants Sprint as a springboard into the United States, where it would come up against the twin towers of the mobile landscape - Verizon Communications Inc and AT&T Inc. Son, who brought the iPhone to Japan, is betting U.S. growth can offer relief from cut-throat competition in Japan's saturated mobile market.
Sprint said its committee evaluating Dish's bid unanimously determined it "is not reasonably likely to lead to a 'superior offer'". Dish has carried out due diligence since receiving a waiver on some merger agreements from SoftBank since May, but the committee said Dish failed to put forward an actionable offer.
"As a consequence of the lack of progress with Dish and the improved terms from SoftBank, the special committee ended its discussions with Dish," Sprint said, though Dish has until June 18 to come back with a best and final offer.
SoftBank said it will use proceeds from recent bond sales as well as a bridge loan already signed with four banks last year to finance the revised deal.
In Tokyo, SoftBank shares initially climbed 1.8 percent after the announcement, extending the previous day's 9.5 percent jump, the stock's biggest one-day gain since October. The shares later retreated to trade 0.4 percent lower, while the benchmark Nikkei average was down 0.9 percent.
(Additional reporting by Edwina Gibbs, Dominic Lau and Sinead Carew; Editing by Edmund Klamann and Ian Geoghegan)