Proxy advisory firm ISS has recommended Clearwire Corporation shareholders to vote in favour of Sprint Nextel’s US$2.97 offer for the remaining shares in the wireless provider.
Sprint made its bid for the half of the indebted company it doesn’t…
Proxy advisory firm ISS has recommended Clearwire Corporation shareholders to vote in favour of Sprint Nextel’s US$2.97 offer for the remaining shares in the wireless provider.
Sprint made its bid for the half of the indebted company it doesn’t already own in December.
Since then activist investors have criticised the offer saying it undervalues the company’s spectrum holdings. Dish Network has also made a higher offer of US$3.30, yet to be responded to by Clearwire’s board and thrown into disarray by Dish’s bid for Sprint.
ISS said Sprint’s offer was in line with price targets determined by independent analysts and that there were precedent transactions for its valuation of the spectrum.
“Clearwire’s business is increasingly unviable on a stand-alone basis,” the firm said.
“The company requires interim financing from Sprint to fund operations and satisfy interest payments; and unusual governance provisions in the company’s foundational documents grant Sprint an effective veto over any other source of financing which might increase leverage and optionality for the board on behalf of public shareholders.”
It concluded that therefore a vote in favour of the transaction was warranted.
UPDATE
On Friday late morning US East Coast time it emerged that a second proxy adivsory firm, Glass Lewis, recommended to Clearwire shareholders to reject Sprint’s US$2.97 per share offer. Glass Lewis concluded in its report: “[We] believe Sprint has failed to provide a clear and compelling case to suggest the existing offer, as currently structured, is the best possible alternative available to the company and its shareholders.”
Clearwire commented, saying it believes that “in its report, Glass Lewis failed to recognise the comprehensive process that led both the Special Committee [set up by Clearwire] and the entire board of directors to unanimously determine that the Sprint transaction is the best altenative for Clearwire’s stockholders”.
