The news at a glance
Sprint approves SoftBank offer; Delta buys big stake in Virgin Atlantic; Starbucks raises drink prices; Enron chief’s sentence reduced; Longtime Carnival CEO steps down
Mergers: Sprint approves SoftBank offerSoftBank’s acquisition of Sprint Nextel is all but done, said Salvador Rodriguez in the Los Angeles Times. Sprint shareholders approved a $21.6 billion offer from the Japanese telecom firm this week, “bringing an end to the takeover drama” that also involved an unsolicited bid by Dish Network. If approved by regulators, the deal will give SoftBank 78 percent ownership of Sprint—the third-largest U.S. wireless carrier, after Verizon and AT&T—and pay investors $7.65 per share. SoftBank originally offered $20.1 billion last year, until Dish triggered a bidding war by offering $25.5 billion for all of Sprint. “Ultimately, SoftBank upped its offer, causing Dish to withdraw.”
The deal will “help Sprint Nextel compete more effectively with its two larger rivals,” said Paul Taylor in the Financial Times. While state regulators have already approved the deal, the Federal Communications Commission still needs to sign off. Sprint CEO Dan Hesse said the “transformative merger agreement” would “enhance Sprint’s long-term value and competitive position by creating a company with greater financial flexibility.” Executives are hoping the new company’s stronger balance sheet will give it “a better position to continue the rollout of its 4G network and potentially take part in further industry consolidation.”
Airlines: Delta buys big stake in Virgin AtlanticVirgin Atlantic and Delta Airlines are teaming up, said Gwyn Topham in The Guardian (U.K.). The U.S. carrier said it would purchase a 49 percent stake in its British counterpart, and the two companies announced a new code-sharing agreement on more than 100 routes. Delta hopes the deal will help it compete on lucrative trans-Atlantic routes and give it greater access to London’s Heathrow International Airport, “while Virgin Atlantic will be able to funnel passengers directly on to Delta’s vast U.S. network.”
Retail: Starbucks raises drink pricesPrepare to pay even more for coffee, said Julie Jargon in The Wall Street Journal. Starbucks raised prices by an average of 1 percent in its U.S. stores last week, marking “the first price change in 18 to 24 months for some markets.” The coffee giant blamed the hike on higher rent, labor, and non-coffee commodity costs. Starbucks said less than a third of beverages would be affected by the price increase, and that the biggest rise would come to 10 cents, but “for competitive reasons” the company did not give out the new prices for specific drinks.
Crime: Enron chief’s sentence reducedJeffrey Skilling, Enron’s former CEO, will be out of prison sooner than expected, said Peter Lattman in NYTimes.com. A federal judge in Houston reduced Skilling’s sentence for fraud last week from 24 years to 14. The decision came after an appeals court found that the judge had misinterpreted federal sentencing guidelines in Skilling’s 2006 trial. Skilling could now leave prison as early as 2017. In exchange for the early release agreement, he agreed not to pursue further appeals and to give up $42 million, which will go to victims of Enron’s fraud.
Travel: Longtime Carnival CEO steps downCarnival CEO Micky Arison is stepping down after 34 years at the helm, said Chris Peters and Phil Wahba in Reuters.com. The world’s largest cruise ship operator said Arison would stay on as chairman, but hand executive control over to long-term board member Arnold Donald. Arison’s resignation comes “after a series of embarrassing mishaps involving the company’s ships, including an engine fire that left the Carnival Triumph adrift for days in the Gulf of Mexico.” Reservations have since taken a hit, “forcing the company to lower prices.” Arison’s late father founded the company in 1974.