Sprint needs control of partner Clearwire's considerable spectrum holdings, and Clearwire shareholders know it.
Sprint owns a majority share of Clearwire—a smidge more than a half—and on Dec. 17, 2012 confirmed that it had made a $2.2 billion, or $2.97 per share, bid to buy out the remainder. On Jan. 8, however, Dish Networks swooped in with what Clearwire has called an "unsolicited bid," offering $3.30 a share but also a more complicated deal.
Sprint was quick to call its offer "superior to the highly conditional Dish proposal." While in many respects that appears to be the case, some Clearwire shareholders aren't content to forgo those extra offered dollars for the sake of simplicity.
A growing number of Clearwire shareholders are now calling on Sprint to increase its offer, according to a Jan. 18 report from Bloomberg.
Glenview Capital Management, which owns approximately 28 million Class A shares in Clearwire, plans to reject Sprint's current offer, a person with knowledge of the situation told Bloomberg. Another investor, Taran Asset Management, has said it plans to file a complaint with the Federal Communications Commission, arguing that's Sprint's bid undervalues Clearwire.
"Sprint has the ability to get the deal done if they increase their offer. To pretend they don't have to raise their bid is silly," said Chris Gleason, a principal at the firm, according to Bloomberg.
Crest Financial, which owns 45.8 million shares, and Mount Kellett Capital Management, which holds 53.2 million shares, are also not content to accept Sprint's offer as-is, reported Bloomberg, adding that there are a total of 691 million Class A shares outstanding.
The third-largest carrier in the United States, Sprint has struggled to hold on to subscribers, attracted away by first the Apple iPhones offered by its rivals and then by the steadily growing Long Term Evolution (LTE) 4G networks that Verizon and AT&T are building.
Sprint now offers the iPhone and is building out an LTE network, but both have come at considerable costs. To relieve its financial burdens, in October 2012 it announced a deal to sell 70 percent of the carrier to Softbank, a wireless carrier in Japan, for $20.1 billion.
While the transaction terms of the deal with Softbank note that Sprint is not required to "take any actions involving Clearwire," it's been reported that Sprint's buying Clearwire is definitely of interest to Softbank.
A Sprint spokesperson told the Kansas City Business Journal that the Sprint-Softbank deal is on track to close by midyear, according to a Jan. 15 report. Furthermore, Doug Duvall, Sprint's vice president of corporate communications insisted to the publication that the Sprint-Clearwire deal depends on the Sprint-Softbank deal going through, and not the other way around.
During a Dec. 17, 2012, call during which Sprint executives discussed the Softbank deal, at least one analyst questioned how Sprint had settled on paying nearly $3 a share for the ailing Clearwire, which he said was arguably worth closer to $2.
"I'll say the board and management team of Clearwire did a very good job, in terms of negotiating for their shareholders," answered Sprint CEO Dan Hesse. "But also at Sprint we ... made sure we were being fair to both sets of shareholders."
Sprint didn't immediately respond to a request for comment regarding whether it intends to make a counteroffer.