Sprint Sweetens Clearwire Deal

by Matt Klassen on May 23, 2013

Trying desperately to avoid rejection by Clearwire shareholders, Sprint sweetened its offer to buy the 50 percent of the company it doesn’t already own on Tuesday, representing the company’s “best and final” offer according to CEO Dan Hesse. In an attempt to wrest shareholder interest away from competing offers from Dish Network and Verizon, Sprint raised its bid for full control over Clearwire to $3.40 a share, which values Sprint’s proposed new stake at $2.5 billion. This stands as a substantial increase over its original offer of $2.97 a share and 10 cents more a share than Dish’s competing bid.

This new bid highlights the resistance Sprint has faced over the past several months in its attempts at a full takeover of Clearwire, as while many shareholders were on board with Sprint’s initial offer, approximately half of the investors not named Sprint (24% overall) were unhappy with the deal, this revised bid offered before the Clearwire shareholder vote on Tuesday now serving as a tacit admission that Sprint knew its initial proposal was bound to fail.

While this sweetened deal unequivocally demonstrates Sprint’s commitment to Clearwire, or rather its desire for the latter’s spectrum assets, it still does little to clear up the ongoing Sprint/Dish Network saga, as not only is Dish Network competing with Sprint to purchase Clearwire, its competing with Japan’s Softbank to acquire Sprint as well!

“The revised offer demonstrates Sprint’s commitment to closing the Clearwire transaction and improving its competitive position in the U.S. wireless industry,” Sprint said in a statement, with CEO Dan Hesse adding that it was the company’s “best and final” offer and, “You can take that to the bank.”

In a statement released yesterday, 24 hours after the revised Sprint proposal, Clearwire said that Sprint’s new offer, “when compared with other potential transactions reasonably available to the company at this time, is the most favourable potential transaction to the company’s unaffiliated stockholders,” going on to recommend that shareholders vote to approve the new deal.

But it seems there are some dissidents still hoping for yet an even better deal, hedge fund company Crest Financial urged shareholders to reject this sweetened deal as still too low.  “Clearwire is acting in its usual stockholder-unfriendly way by adjourning the special meeting to grant Sprint the ability to pose a new, still inadequate offer,” David K. Schumacher, Crest’s general counsel, said in a statement. “Stockholders should demand that the Clearwire board finally act in the best interest of all shareholders, not just in the interest of Sprint.”

As mentioned, the battle over Clearwire is playing out under the shadow of the potential takeover of Sprint itself, with Japan’s Softbank competing against Dish Network for control over America’s third largest wireless service provider. With Sprint’s bid for Clearwire backed by a cash infusion from Softbank, yet with the former still considering the rival bid from Dish Network even as it fights its potential suitor for control of Clearwire, things are anything but clear in this soap opera drama, although all parties are optimistic that the quagmire will get cleared up in the next several weeks.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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