Feeds

Sprint offers $2.2bn to acquire second half of Clearwire

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

High performance access to file storage

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. ®

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.