Sprint Nextel is trying to block Dish Network’s tender offer for US telco Clearwire with a lawsuit that claims it is structurally and actionably coercive.
The legal action by the third largest mobile operator in the US was filed on the eve of…
Sprint Nextel is trying to block Dish Network’s tender offer for US telco Clearwire with a lawsuit that claims it is structurally and actionably coercive.
The legal action by the third largest mobile operator in the US was filed on the eve of today’s deadline for Dish to sweeten its earlier US$25.5bn bid to buy Sprint, which is backing a competing offer from Japan’s Softbank.
In its complaint, Sprint claims the satellite broadcaster’s US$4.40 per share offer for a minimum of 25% of Clearwire violates a shareholder agreement it shares with the target, as well as its company charter.
Sprint, which already holds more than half of Clearwire’s stock but aims to buy the rest of it at US$3.40 per share, said these agreements prohibit the tender offer from being completed without the support of 75% of Clearwire’s shareholders, nor without the approval of another key shareholder Comcast.
According to Sprint, Dish has “repeatedly attempted to fool Clearwire’s shareholders into believing its proposal was actionable in an effort to acquire Clearwire’s spectrum and to obstruct Sprint’s transaction with Clearwire”.
It also claimed the offer is “unlawfully coercive” because it threatens to leave non-tendering shareholders in a company subject to governance deadlocks or substantial damage awards to Dish – if Clearwire is unable to meet “unenforceable promises” laid out in the offer.
Clearwire, which last week recommended its shareholders accept Dish’s offer and reject Sprint’s bid, is a defendant in the lawsuit along with Dish.
A Dish spokesman said: “We are reviewing the complaint and considering our options.” Clearwire was unable to comment before the press deadline.
The satellite broadcaster also announced yesterday that it had received antitrust approval for its Clearwire offer, after a waiting period expired on 14 June without objection.
But the lawsuit is the latest twist in its more sizeable US$25.5bn plan to acquire Sprint and wrestle it from a planned takeover by Softbank.
In early June Sprint announced that it had ended talks with Dish because this offer was “not actionable”, as it called on the DTH group to destroy the due diligence files it had obtained. Instead, Sprint said it was backing a recently improved US$21.6bn offer from Softbank.
However, in the revised merger plan agreed by the boards of both Sprint and Softbank, Dish was given a deadline of 18 June to put forward its “best and final” offer.
