US satellite television provider Dish Network said Tuesday it has dropped plans to submit a revised bid for Sprint Nextel, paving the way for a rival offer from Japan's SoftBank.
Dish said it still saw "strategic value" in a merger with Sprint but that it would not submit a revised offer by Tuesday's deadline owing to Sprint's decision to terminate due diligence and accept a SoftBank offer.
"We will consider our options with respect to Sprint, and focus our efforts and resources on completing the Clearwire tender offer," it added, referring to a separate deal.
The move clears the way for SoftBank's merger bid with Sprint targeting a 78 percent chunk of the third-largest US mobile carrier.
At $21.6 billion, the deal could mark the biggest overseas acquisition ever by a Japanese firm. SoftBank had upped its offer last week by about $1.6 billion from an initial $20 billion offer.
"We look forward to receipt of the FCC (Federal Communications Commission) and shareholder approvals which will allow us to close in early July and begin the hard work of building the new Sprint into a meaningful third competitor in the US market," said SoftBank spokesman Kurano Mitsuhiro, after Dish pulled out of the bidding.
SoftBank's Tokyo-listed shares closed 4.20 percent higher at 5,460 yen ($57) on Wednesday.
Last week, a joint SoftBank-Sprint statement encouraged Sprint investors to vote for the deal at a June 25 shareholders meeting.
In April, SoftBank chief Masayoshi Son painted his deal as superior, saying the Japanese firm had more experience in debt-financed takeovers and his bid could be consummated one year earlier than its rival.
The proposed takeover would see already heavily indebted SoftBank taking on even more debt.
But it won a high-profile boost as New York-based hedge fund Paulson & Co, Sprint's second-largest shareholder, said it would back the SoftBank offer as it praised the company's "exceptional operating expertise".
Under the revised deal SoftBank would offer Sprint shareholders $16.6 billion in cash, compared with $12.1 billion previously, reducing the amount of cash the firm would receive.
Last month US national security officials approved SoftBank's planned takeover, but said any merger must see the appointment of an independent member to the Sprint board of directors to serve as security director.
The director, who must be approved by US authorities, would oversee national security matters and serve as a point of contact for US agencies.
The US Department of Justice in January urged regulators to delay the proposed cross-border takeover until the national security ramifications had been evaluated.
Dish, which offered $25.5 billion for Sprint, had said the tie-up with SoftBank would pose national security risks.
Separately, Dish and Sprint are seeking control over heavily indebted US broadband firm Clearwire's large array of wireless services.
Sprint wants Clearwire's spectrum and broadband WiMax network, which is becoming more valuable with the surge of mobile Internet use.
Dish is seeking Clearwire's spectrum as part of an effort to build a company that could deliver a fully integrated nationwide bundle of video, television, broadband Internet and voice services.
Last week, Clearwire urged its shareholders to accept Dish's takeover offer of $4.40 per share in cash, which would give Clearwire a market value of $3.1 billion. Sprint's last offer was for $3.40 a share.