Proxy advisory firm Glass Lewis has again dismissed Sprint Nextel’s takeover offer for Clearwire Corporation, despite the fact that the carrier’s latest bid is 14% higher than its previous proposal.
Earlier this month Glass Lewis advised Clearwire…
Proxy advisory firm Glass Lewis has again dismissed Sprint Nextel’s takeover offer for Clearwire Corporation, despite the fact that the carrier’s latest bid is 14% higher than its previous proposal.
Earlier this month Glass Lewis advised Clearwire investors to vote against Sprint’s US$2.97 offer for the remainder of the shares it doesn’t already own.
Worried that its offer wouldn’t be approved Sprint went on to raise it on the eve of a shareholder vote scheduled for 21 May. Its new US$3.40 offer will be decided on by investors this Friday at an EGM.
Today Clearwire shares were trading above Sprint’s latest offer price, fluctuating between US$3.42 and US$3.49.
In its analysis Glass Lewis said that Sprint’s case for the merger was neither clear nor compelling. While it acknowledged that Clearwire needed capital and that a standalone strategy carried significant risks, it doubted that the wimax provider’s board had explored all available alternatives.
“While we accept, as a matter of course, that Sprint’s own interests may differ significantly from the remainder of the company’s shareholders, we do not believe those interests abdicate the full board of its responsibility to pursue transactions that are fair to, and in the interests of, all shareholders,” Glass Lewis said.
Clearwire criticises
Clearwire’s board backed Sprint’s previous lower bid and disagreed with Glass Lewis’ assessment calling it “fundamentally flawed and inaccurate”.
Clearwire stressed that it had exhausted the alternatives to a sale to Sprint and pointed to recommendations of the deal from proxy advisory firms ISS and Egan-Jones.
“With the vote for Clearwire’s proposed merger with Sprint just days away, the Clearwire board and special committee felt compelled to respond to Glass Lewis’ recent report, which Clearwire believes was based on superficial analysis, contained numerous inaccuracies, and grossly underestimates the economic realities facing the company.
“The report also demonstrates a complete lack of understanding of Clearwire’s existing governance structure and erroneously assesses the value of the company’s proposed transaction with Sprint.”
Crest commends
Crest Financial, which describes itself as the largest of Clearwire’s independent minority stockholders, took a different view.
“Glass Lewis’ independent analysis and expert opinion confirm our view that Sprint is continuing to divert value away from Clearwire and toward Sprint,” said Crest’s general counsel David Schumacher.
“As Glass Lewis has pointed out, in pursuing this transaction with Sprint, Clearwire’s board of directors has shown ‘sharply disproportionate deference to the interests of Sprint.’
“Furthermore, Glass Lewis questioned Clearwire’s review of alternative offers and said minority stockholders have ‘significant cause’ to doubt that Sprint made its ‘best and final’ offer for Clearwire.”
