Hey guys,

I have a quick question regarding the acquisition of a public company. This is pretty basic, but one that I never figured out (and probably should ahead of upcoming interviews):

Using Softbank's acquisition of Sprint as an example, Softbank acquired 70% of Sprint last year (still awaiting regulatory approval).

Let's assume that they're paying for shares of Sprint all in cash, that Sprint is trading at $10/share, and their acquisition is at a price of $15/share.

Given the fact that these 70% shares of Sprint that Softbank is acquiring is held by the public, how exactly can Softbank say that they're acquiring 70% of Sprint? How do they know that the people holding onto shares of Sprint will actually sell their shares for $15/share?

Similarly, how do companies who buy out an entire public firm actually buy out 100% of the firm without any holdouts?

I feel like I'm missing a key piece of the puzzle here. Any explanation would be greatly appreciated.

Comments (3)


When you hear the portion of the company they are purchasing, it is already taking into consideration the premium that will be paid. So in your example, the 70% figure is based on Softbank buying those shares of Sprint at $15 and not $10. To answer your second question the Board would vote on whether on not to sell the company and minority investors would have very little say and could not hold out if the sale was approved by the board.

The WSO Advantage - Land Your Dream Job

Financial Modeling Training

IB Templates, M&A, LBO, Valuation.

Wall St. Interview Secrets Revealed

30,000+ sold & REAL questions.

Resume Help from Finance Pros

Land More Interviews.

Find Your Mentor

Realistic Mock Interviews.


Hey Tyler,

Thanks for your response. I understand the first point, but would like some clarification on the second:

If I, for example, was a shareholder of Sprint (let's say I owned 0.5% of all of Sprint's shares), and the Board of Directors voted to let Softbank purchase 70% of the company, I would be required to sell my shares at the 15% premium?

In reply to A Fellow Linguist

To unlock this content for free, please login / register below.

  • Facebook
  • Google Plus
  • LinkeIn
  • Twitter
Connecting helps us build a vibrant community. We'll never share your info without your permission. Sign up with email or if you are already a member, login here Bonus: Also get 6 free financial modeling lessons for free ($200+ value) when you register!

What's Your Opinion? Comment below:

Login or register to get credit (collect bananas).
All anonymous comments are unpublished until reviewed. No links or promotional material will be allowed. Most comments are published within 24 hours.
WallStreet Prep Master Financial Modeling