US DTH provider Dish Network has launched a fresh bid to acquire Clearwire Corporation on the eve of the wireless wholesaler’s shareholders voting on a new offer from Sprint Nextel.
Dish’s US$4.40 offer trumps Sprint’s latest US$3.40 proposal….
US DTH provider Dish Network has launched a fresh bid to acquire Clearwire Corporation on the eve of the wireless wholesaler’s shareholders voting on a new offer from Sprint Nextel.
Dish’s US$4.40 offer trumps Sprint’s latest US$3.40 proposal. Last week, the wireless operator was compelled to raise its previous offer by 14% because of pressure from activist investors, as it looks to acquire the remaining 50% of Clearwire.
Clearwire shareholders are set to vote on Sprint’s new offer tomorrow and Dish plans to launch a tender offer before that meeting.
The satellite broadcaster also has a US$25.5bn bid lodged for Sprint as it looks to rival Softbank for the operator.
“The Clearwire spectrum portfolio has always been a key component to implementing our wireless plans of delivering a superior product and service offering to customers,” said Charlie Ergen, chairman and co-founder of Dish; the Denver-based company had already bid for Clearwire in January.
Dish has offered to buy all of Clearwire’s outstanding shares, but has said it would be satisfied with acquiring a minimum of 25%. As part of its offer, it wants Clearwire to terminate its funding arrangement with Sprint whereby the carrier is purchasing US$80m in exchangeable notes from the wireless internet provider every month.
Dish has offered to provide funding to Clearwire on a similar basis to Sprint. The DTH provider is also looking to gain seats on Clearwire’s board.
“This seriously complicates Sprint’s bid for Clearwire,” said New Street Research analysts in a memo. New Street speculated that rather than acquiring either Clearwire or Sprint, Dish is actually interested in buying 40MHz of spectrum from Clearwire.
Dish has previously said that it will need more than its current spectrum holdings to provide nationwide wireless services.
“We know they want 40MHz of spectrum and this revised bid could provide them with the leverage to get it,” said New Street. “The least bad option for Sprint / Softbank may be to allow Dish to acquire the spectrum they want.”
Clearwire’s share price has leapt by more than 20% overnight following Dish’s new offer. At 9:30am EDT, it was trading at US$4.25 – more than 21% higher than the previous close of US$3.51 – suggesting that the market does not expect Sprint’s US$3.40 offer to be approved tomorrow.
BTIG Research analyst Walter Piecyk believes the operator would have to raise its offer considerably higher: “Sprint could get the Clearwire deal done at US$5 but that might have just risen. Investors are still scratching their heads on why Sprint chose to randomly raise their bid for Clearwire to US$3.40 last week based on what appears to be technical reasons without actually talking to investors on whether that price would lead to a yes vote.”
“They would be wise to call [activist investor] Mount Kellett tonight and agree on a price for Clearwire.”
