US wireless operator Sprint Nextel has raised its offer to acquire the remaining 50% of Clearwire Corporation it does not already own to US$3.40 per share. A shareholder meeting to vote on the takeover, scheduled for today, will now be held on 30…
US wireless operator Sprint Nextel has raised its offer to acquire the remaining 50% of Clearwire Corporation it does not already own to US$3.40 per share. A shareholder meeting to vote on the takeover, scheduled for today, will now be held on 30 May.
The new bid is US$0.43 or 14% higher than its initial US$2.97 bid recommended by Clearwire’s board in December, making shareholder approval more likely.
It equals a 162% premium on the target’s share price the day before the confirmation of discussions of a sale of Sprint to SoftBank. Clearwire was always speculated to be part of that transaction.
Clearwire shareholders had been due to vote on Sprint’s offer today but the company’s share price, which traded well above the US$2.97 offer for weeks, suggested the proposal would be voted down. Analysts had also previously predicted that Sprint would have to improve its offer.
While the Clearwire board was in favour of Sprint’s first bid, activist investors have criticised the offer saying it undervalues Clearwire’s substantial spectrum holdings in the 2.5GHz band. DTH provider Dish Network made a rival bid of US$3.30 in January.
Sprint’s bid was recommended by proxy advisers ISS and Egan Jones, but Glass Lewis told investors that they shouldn’t vote in favour of the transaction.
“The revised offer demonstrates Sprint’s commitment to closing the Clearwire transaction and improving its competitive position in the U.S. wireless industry. Sprint is uniquely positioned to leverage Clearwire’s 2.5GHz spectrum assets,” Sprint said in a statement, adding that its offer values the target at US$10.7bn.
Clearwire has received commitments from Comcast, Intel and Bright House Networks – which hold 26% of Clearwire’s shares not affiliated with Sprint – to vote their shares in support of the transaction.
“While there likely will be shareholders still objecting – those that believe Clearwire could be an ongoing entity – we believe this price is enough to get this deal approved,” said Wells Fargo analyst Jennifer Fritzsche in a note.
Nomura analysts agreed with that view: “Clearwire’s stock price has for some time reflected a market expectation of a higher bid from Sprint.
“With a higher offer, enough shareholders could be placated to get the transaction completed.”
However, the principal at Clearwire shareholder Taran Asset Management has told Reuters that he would not vote for the offer as he believes the shares are worth more.
