Wireless internet provider Clearwire Corporation has once again cancelled an EGM for shareholders to vote on Sprint Nextel’s offer to buy the company, following a higher bid from Dish Network. Last week, Clearwire postponed the first vote after…
Wireless internet provider Clearwire Corporation has once again cancelled an EGM for shareholders to vote on Sprint Nextel’s offer to buy the company, following a higher bid from Dish Network.
Last week, Clearwire postponed the first vote after Sprint raised its bid from US$2.97 per share to US$3.40 in order to appease investors. The mobile operator said that its revised proposal was its best and final offer.
On Wednesday, Dish trumped Sprint’s latest bid by making a tender offer at the US$4.40 mark for a minimum of 25% of the stock.
In a statement, activist investor Crest Financial indicated Dish’s latest bid may still not be high enough for some. “As we have said repeatedly, the battle for Clearwire is just beginning,” the firm added.
Clearwire has subsequently rescheduled the shareholder vote on Sprint’s proposal to 13 June, and said that its special committee will now engage in discussions with Dish.
The DTH provider previously bid for Clearwire in January, but that offer was seen as highly conditional. In a statement, the special committee noted that this “proposal appears to be more actionable than Dish’s previous proposal”.
Clearwire also said it had decided to forego taking financing from Sprint for June. Since March Sprint has been acquiring US$80m of exchangeable notes from Clearwire each month which Sprint can later convert into Clearwire stock, thus expanding its stake in the company and diluting minority shareholders’ stakes.
Clearwire said it had not decided whether or not it would take financing from Sprint from July onwards; the facility is open to Clearwire until October.
It added that it continues to recommend Sprint’s US$3.40 per share bid.
Dish also has a US$25.5bn takeover bid lodged for Sprint, rivalling Softbank’s US$20.1bn proposal to buy 70% of the operator agreed on last October.
During an investor call, a Wells Fargo analyst speculated that Dish chairman Charlie Ergen was not looking to acquire Sprint or Clearwire, rather that he was looking to partner-up with a combined Sprint/Softbank and that his latest pursuit of Clearwire was for leverage.
“If you were Sprint or Softbank […] would you want [Ergen] on your side rather than this man competing against you further down the line?” asked analyst Marci Ryvicker, concluding that the operators may choose to partner with Dish.
Her colleague Jennifer Fritzsche commented: “The interpretation of this move is not that Dish wants to buy Clearwire because as we know Dish is already sitting on a lot of unused, attractive spectrum – Clearwire brings in more of that and really no network to speak of – so in our view Dish ultimately wants a network partner.”
Fritzsche sees three possible outcomes for Dish: a combination of any or all of Softbank, Sprint and Clearwire, and Dish; a deal to extract a favourable network hosting agreement for Dish from either Sprint or T-Mobile US; or for Dish to sell its business or its spectrum.
