US number three-operator Sprint Nextel has reached an agreement to acquire the remaining half of Clearwire shares for US$2.97 per share, equating to US$2.2bn.
The bid is 7 cents higher than last week’s initial bid of US$2.97, which received fierce…
US number three-operator Sprint Nextel has reached an agreement to acquire the remaining half of Clearwire shares for US$2.97 per share, equating to US$2.2bn.
The bid is 7 cents higher than last week’s initial bid of US$2.97, which received fierce criticism from minority shareholders Mount Kellett Capital Partners and Crest Financial.
The transaction is subject to approval by a majority of Clearwire stockholders not affiliated with Sprint. Shareholders Comcast, Intel and Bright House Networks – who collectively own 13% of Clearwire shares – have all pledged to vote in favour of the transaction.
Crest Financial and Mount Kellett hold 6.2% and 3.6% stakes respectively.
After trading as high as US$3.40 on Friday, Clearwire shares fell below the new offer price today, trading around US$2.91 before going to press.
Sprint, which holds just over 50% of Clearwire’s stock, said the offer gives the target an enterprise value of around US$10bn, taking into account the WiMax venture’s debt and spectrum lease obligations amounting to US$5.5bn debt.
At the end of last week Mount Kellett said the wireless enterprise’s spectrum was worth between US$15bn and US$18bn, and argued that the true value of Clearwire’s stock was US$6.30 per share.
Clearwire’s special committee recommended Sprint’s latest offer and its board approved it.
Sprint noted the US$2.97 price represents a premium of 128% on Clearwire’s closing share price the day before the Sprint-Softbank discussions were first confirmed in October.
“Sprint is uniquely positioned to maximize the value of Clearwire’s spectrum and efficiently deploy it to increase Sprint’s network capacity,” Sprint CEO Dan Hesse said.
“We believe this transaction, particularly when leveraged with our Softbank relationship, is further validation of our strategy and allows Sprint to control its network destiny.”
Softbank is set to acquire 70% of Sprint for US$20.1bn, pending approvals. Clearwire’s significant spectrum holdings are said to be key to the Japanese businesses expansion plans for Sprint.
Clearwire CEO and president Erik Prusch said that after mulling strategic options for two years, he considered the deal the “best path forward” to deliver value to shareholders.
In connection with the transaction, Sprint has committed to US$800m of additional financing for Clearwire in the form of exchangeable notes, which will be convertible into Clearwire common stock at US$1.50 per share subject to certain conditions.
Under the financing agreements, Sprint will purchase US$80m of the notes each month for up to 10 months, beginning in January 2013.
The closing of the transaction is contingent on the successful takeover of Sprint by Softbank, which is expected to close mid-2013.
Citigroup is financial advisor to Sprint while Skadden, Arps, Slate, Meagher & Flom and King & Spalding act as counsels.
The Raine Group is as financial advisor to Softbank with Morrison Foerster acting as counsel.
Clearwire is advised by Evercore Partners, while Kirkland & Ellis is its counsel.
Clearwire’s special committee was financially advised by Centerview Partners with Simpson Thacher & Bartlett and Richards, Layton & Finger acting as counsels. Blackstone Advisory Partners advises Clearwire on restructuring matters.
