Dish Network Offer to Clearwire Threatens to Stall Sprint Buyout Plans

NEWS ANALYSIS: Dish Network offers a premium purchase price for the part of Clearwire not already owned by Sprint in a last-minute effort to disrupt the carrier’s purchase of wireless spectrum it must have to stay competitive with AT&T and Verizon.

Dish Network offered a premium purchase price for the part of Clearwire not already owned by Sprint in a last-minute effort to disrupt the carrier’s purchase of wireless spectrum it must obtain to stay competitive with AT&T and Verizon. But why is Clearwire suddenly so attractive to Dish?

Dish Network has thrown up a potential roadblock to Sprint’s proposal to buy up the rest of wireless carrier Clearwire, which, until now, seemed destined to sail through the regulatory review process.

However, Clearwire confirmed on Jan. 9 that it had received an unsolicited offer from Dish Network to buy the company's available stock for $3.30 per share, which is 33 cents per share more than what Sprint offered to Clearwire late last year. Sprint already owns 51 percent of Clearwire and it moved to buy up the rest of the company after Sprint agreed to sell itself to SoftBank, a Japanese telecommunications company.

So can Dish manage to buy Clearwire when Sprint already owns controlling interest in the company? The answer is no, it can’t. But it can cause endless problems for Sprint to the point that Sprint may agree to some sort of accommodation just to make Dish go away.

With its sweetened offer, Dish can try to entice enough non-Sprint shareholders to sell their stock at its premium price to force Clearwire to give Dish a share of their board. With that, Dish can attempt to force changes in Sprint’s acquisition agreement with Clearwire. Clearwire, meanwhile, is required to at least consider the Dish offer. However Clearwire also provided a long list of reasons why the Dish acquisition effort was unlikely to happen, including existing contractual requirements with Sprint.

Sprint, as you might imagine, is none too thrilled. “Sprint believes its agreement to acquire Clearwire, which offers Clearwire shareholders certain and attractive value, is superior to the highly conditional Dish proposal,” the company said in a prepared statement.

“In contrast, the Dish proposal includes a series of interdependent commercial agreements, debt and equity purchases and spectrum sales, which together with the other conditions required by Dish to complete the transaction, makes the proposal not viable. In addition, the Dish proposal would require Sprint to voluntarily waive rights that it holds as a stockholder of Clearwire and that it possesses through various vendor and customer contracts that significantly predate Sprint’s proposed acquisition of the remainder of Clearwire. Sprint does not intend to waive any of its rights and looks forward to closing the transaction with Clearwire and helping consumers across the country realize the benefits of this combination.”