Feeds

Sprint offers $2.2bn to acquire second half of Clearwire

But will minority shareholders accept buyout? Mebbe so, mebbe not

Top 10 endpoint backup mistakes

Sprint, which already owns 51.7 per cent of wireless broadband service provider Clearwire, has announced a deal to acquire the remaining (nearly) half in a deal that would pay $2.97 per share to that company's minority shareholders – a deal that is in no way a slam dunk.

"Today we are announcing that the boards of directors of Sprint and of Clearwire have each unanimously approved a definitive agreement for Sprint to acquire all of the remaining outstanding shares of Clearwire," Sprint CEO Dan Hesse said during a conference call on Monday morning.

"This is not going to be popular with the minority shareholders," one industry analyst told Reuters.

That's a bit of an understatement. Just last Thursday, Sprint offered $2.90 per share for Clearwire, and those minority shareholders were not impressed. One, Crest Financial, filed a lawsuit to stop Clearwire from selling itself to Sprint, and another, Mount Kellett, said the deal "grossly" undervalued Clearwire and its spectrum assets.

Whether those shareholders' displeasure was merely a bargaining move to squeeze just a few more pennies per share out of Sprint is not known, but pennies is indeed all they have accomplied. Seven per share, to be exact.

Not that Sprint is penniless. Exactly two months and two days ago, Japanese mobile operator Softbank announced its intentions to acquire a 70 per cent stake in Sprint for a cool $20.1bn, giving Sprint the cash infusion it needed to advance its "margin expansion" plans, and giving Softbank the toehold it wants in the lucrative US mobile market.

Softbank supports the Clearwire deal, but Reuters reports that it won't approve an offer of more than $2.97 per share, despite shareholder opposition. And not all minority shareholders oppose the deal. According to The New York Times' Dealbook, Comcast, Intel, and Bright House Networks – which together own 13 percent of the voting shares – have told Clearwire that they're in support of the sale.

During the conference call, Hesse argued for a quick decision on the acquisition. "The value created by this transaction to both sets of shareholders may go down over time if we delay," he counseled.

Clearwire CEO Erik Prusch also pointed out that his company's value has already increased markedly since the Softbank investment in Sprint. He noted that the offer represents "an approximate 130 per cent premium to Clearwire's closing share price on October 10, just before Sprint publicly acknowledged its merger discussions with Softbank, and Clearwire was speculated to be part of that transaction."

For his part, Hesse argued that buying all of Clearwire, and not just chunks of its spectrum, was the only rational move for Sprint. "Clearwire's is a case where the whole is worth more than the sum of the parts," he said on the call.

"Clearwire's spectrum could be compared to a pair of shoes or a pair of socks," he said. "If a pair of shoes sells for a hundred dollars, a single shoe would not be worth fifty dollars."

Whether Hesse and Prusch can convince enough of Clearwire's minority shareholders that Sprint's offer for those spectral shoes is a fair and reasonable one, however, remains to be seen. ®

A new approach to endpoint data protection

More from The Register

next story
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?