The wireless broadband company is down 2.2% in after hours trading following Dish Network‘s announcement that it has taken its $4.40 a share offer off the table. Dish says that it made its decision after Clearwire’s board recommended that investors accept a $5 offer from Sprint, which already owns about half of Clearwire‘s stock. Sprint’s offer valued Clearwire at more than $14B. The developments pose a dilemma for Dish Chairman Charlie Ergen as he tries to create a national wireless broadband service. He has been amassing airwave spectrum rights but has said that he needs additional licenses. He had hoped to secure that by acquiring a large minority stake in Clearwire – and by acquiring Sprint. But Japan’s SoftBank is poised to win the mobile phone provider after it outbid Dish.
The tug of war over wireless broadband provider Clearwire just became more interesting, and precarious for Dish Network. Sprint has raised its offer for the 50% of Clearwire it doesn’t already own to $5 a share — valuing the wireless broadband company at more than $14B — which tops Dish Network’s $4.40 a share bid. That led Clearwire’s board today to switch sides: It now recommends that shareholders support Sprint instead of Dish. They’ll have a chance to vote on July 8 following the company’s decision to postpone a June 24 special meeting. “The amended agreement with Sprint clearly acknowledges the significant value present in Clearwire – from our deep portfolio of wireless spectrum to the tremendous amount of progress the Clearwire team has made in improving our operations and beginning the construction of our next-generation 4G LTE network,” CEO Erik Prusch says. In addition, shareholders owning about 9% of Clearwire have said that they’ll support Sprint. Between these investors — and others including Comcast and Intel who’ve supported the wireless phone company — Sprint believes that a majority of independent shareholders will support it over Dish. If they don’t, then Clearwire must pay Sprint a $115M break-up fee.
Charlie Ergen’s Dish Network has been playing two games at once with Sprint Nextel: a bidding war with SoftBank for the entire company, while also attempting to acquire Sprint’s stake in spectrum-holder Clearwire. Missing today’s Sprint-imposed deadline to counter SoftBank doesn’t mean Dish can’t still bid on the No. 2 mobile services provider, but the company says it will “focus our efforts and resources on completing the Clearwire tender offer.” Dish has offered $4.40 a share for Sprint’s Clearwire stake as the satellite provider seeks to amass spectrum rights to launch its own wireless broadband network.
While its satcaster rival goes after Hulu, Dish on Wednesday upped the ante in its bid for a mobile-broadband operator. The Wall Street Journal reports that the No. 2 satellite TV company offered to acquire Clearwire for $4.40 a share in cash, a nearly 30% premium over Sprint Nextel’s $3.40 offer last week. Dish’s bid values its target at about $6.3 billion. It’s the second time Dish outbid Sprint for the company: Weeks after the wireless giant offered $2.97 a share for Clearwire in December, the satco came back at $3.30. “The Clearwire spectrum portfolio has always been a key component to implementing our wireless plans of delivering a superior product and service offering to customers,” said Dish Chairman Charlie Ergen in a statement.
Dish‘s unsolicited and non-binding offer values Clearwire at $3.30 a share totaling $5.15 billion for all of Clearwire. The per-share price tops a previous bid by Clearwire’s majority shareholder Sprint Nextel by around 11%, according to the Wall Street Journal. Clearwire told the Journal that its ability to enter negotiations with Dish is “significantly limited” by its agreement with Sprint and with its shareholders. The wireless carrier owns around 50% of Clearwire already and has made a bid to buy the stake it does not currently own for $2.97 a share, or $2.2B. The company said Dish Network’s bid “is only a preliminary indication of interest and is subject to numerous, material uncertainties and conditions. Clearwire said it received a letter from Sprint stating it had reviewed Dish’s offer and “believes that it is illusory, inferior to the Sprint transaction and not viable…”, according to Reuters and The New York Times. Both Dish and Sprint are vying for access to viable spectrum. Last month, Dish won a critical regulatory ruling, gaining the right to convert some satellite airwaves for cellphone service. Whatever the case, Wall Street seemed unmoved by the news: Dish shares dropped just a tick — down 1.3 percent to $35.50 in after-hours trading.
Sprint Nextel is negotiating to gain control of Clearwire via agreements with its wireless broadband partner’s other investors, the Wall Street Journal reports. The talks would allow Sprint to gain control of Clearwire’s board without acquiring it. Gaining control of Clearwire is seen as crucial to Softbank’s planned $20 billion acquisition of Sprint. Clearwire investors include Craig McCaw’s Eagle River Holdings and Comcast Corp. Sprint owns 48% of Clearwire but doesn’t control the board. Sprint needs access to Clearwire’s significant spectrum rights, and Softbank lenders want assurance that Sprint will be able to control Clearwire.