Sprint Nextel has settled on a US$120m breakup fee with Clearwire as part of its US$2.2bn agreement to buy the remaining stock of the WiMax wholesaler that it does not already own.
In an SEC filing Sprint said it will be required to pay the sum should…
Sprint Nextel has settled on a US$120m breakup fee with Clearwire as part of its US$2.2bn agreement to buy the remaining stock of the WiMax wholesaler that it does not already own.
In an SEC filing Sprint said it will be required to pay the sum should its US$20.1bn deal with Softbank fall through or if its purchase of the almost 50% of Clearwire shares it is trying to buy does not close before 15 October 2013.
Sprint’s deal to buy Clearwire is subject to the closure of Softbank’s acquisition of Sprint.
Softbank struck an agreement to buy 70% of Sprint in October and is said to want to expand the business, in part through spectrum owned by Clearwire.
The US$2.97 per share Clearwire deal is subject to approval by its minority shareholders. While Sprint’s offer represents a premium of 128% on Clearwire’s closing share price the day before the Sprint-Softbank discussions were first confirmed, some shareholders have protested.
Minority investors Crest Financial and Mount Kellett Capital Management have argued that Sprint’s offer undervalues the company, given the value of Clearwire’s spectrum.
Crest has initiated a class action lawsuit in a bid to block Sprint’s offer.
Sprint said the merger is conditional on the approval of holders of at least 75% of the outstanding shares of Clearwire’s common stock. Shareholders Comcast, Intel and Bright House, who together hold 13% of the company’s shares, have already given their consent to the deal. .
The breakup fee is proportionately higher than the US$600m termination charge Softbank would pay if it fails to complete its 20.1bn Sprint acquisition. For its part Sprint has to pay US$75m if it pulls out of the Softbank deal.
