The New York Times yesterday reported that Japanese telecommunications company SoftBank is in merger talks with Sprint, possibly to invest up to $12.5 billion for a 70% stake in the company. On the surface, I don’t see a regulatory problem with such merger unless the Federal Communications Commission is ready to buck precedence on foreign companies owning U.S. operations.
The first issue will be whether Sprint will be directly or indirectly controlled by any other corporation of which more than one-fourth of the capital stock is owned of record or voted by aliens, their representatives, or by a foreign government or representative thereof, or by any corporation organized under the laws of a foreign country. If the answer to the first issue is yes, then the second issue will be whether the public interest will be served by the refusal or revocation of such license.
The Federal Communications Commission will make its determination based on the following criteria. First, the FCC will determine if the claimed benefits of the transaction are actually related to the transaction. There must be likelihood that the benefits result from the investment and the benefits would unlikely result from other means that entail less anti-competitive effects.
Second, the claimed benefits must be verifiable. The parties must be provide sufficient evidence supporting each claimed event so the FCC can verify the likelihood of the benefits and their magnitude.
Finally, where there are substantial and likely harms from the transaction, the parties must demonstrate that the benefits they claim will result from the transaction must reveal a higher degree of magnitude and likelihood.
Right now Sprint and SoftBank are just talking, according to the Times report. We should have some idea as to what they claim the transactions benefits will be over the next several days.