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By Sinead Carew
NEW YORK (Reuters) - Omega Advisors, one of the biggest shareholders in Sprint Nextel Corp, on Wednesday joined a growing group of investors who say they favour Dish Network Corp's $25.5 billion (16.7 billion pounds) bid for the company over SoftBank Corp's offer.
Dish Chairman Charlie Ergen on Monday announced a challenge to SoftBank's $20.1 billion offer to buy 70 percent of No. 3 U.S. mobile provider Sprint, prompting support from shareholders including activist Paulson & Co. on Tuesday.
Leon Cooperman, the chairman of Omega Advisors Inc, a holder of both Dish and Sprint shares, said Ergen is currently in the lead in terms of valuation even as he praised Japan's SoftBank and its billionaire founder Masayoshi Son.
"We think that Dish's bid at the moment is superior," Cooperman said. "At the end of the day either company would make a good steward. They have to decide what its worth to them."
Omega now owns 75 million Sprint shares after adding some recent stock purchases, according to Cooperman. Omega was Sprint's 10th biggest shareholder as of Dec 31 when it held 56 million Sprint shares and 3.7 million Dish shares according to the most recent public filings.
While Dish shares fell after the bid was announced on Monday on concerns it could end up over-paying, the stock has recovered as support for the offer appeared strong.
Even if Dish gets into a bidding war with SoftBank, Cooperman said he is happy with his Dish investment as he sees a combination with Sprint as an "excellent use" of the wireless spectrum Ergen spent billions of dollars buying in recent years.
"We think that Dish is undervalued so we don't mind getting more Dish stock ... We think if Dish wins Sprint, we can see conditions where Dish could be worth, in a couple of years time, $50," he said.
Dish's bid includes $4.76 in cash and 0.05953 share of Dish stock for each Sprint share and would leave Sprint shareholders with a 32 percent ownership of the combined company. The offer, which works out to $7 per share, represents a premium of roughly 12 percent to Sprint's close on Friday.
Cooperman's comments follows support for Dish from other Sprint shareholders on the day the deal was announced.
A money manager at one of the operator's top 25 shareholders told Reuters on Monday that they would vote for the deal. Merger arbitrage firm Westchester Capital, which held 12 million Sprint shares at the end of 2012 also said that the Dish offer appeared to be better deal than the SoftBank agreement.
SoftBank's Son is expected to stay in the battle to buy Sprint even though he could make a profit of about $3.5 billion by walking away. SoftBank analysts have said they expect the Japanese company to sweeten its bid.
But Cooperman said he does not expect Ergen to overpay.
"At the end of the day we're prepared to allow Charlie to determine what is too much and what is not too much ... He's not going to be crazy. He's too rational. He's too smart." he said. "You're dealing with two very smart guys. We're just going to sit back and let them go."
Sprint shares closed down 1.5 percent on Wednesday at $7.09 but were still 14 percent above their close the day before the Dish offer emerged. Dish shares closed down 9 cents at $37.83 on Wednesday but were still up 2.5 percent than their April 12 close.
(Additional reporting by Herbert Lash in New York; Editing by Bob Burgdorfer)