Clearwire Board Unanimously Dumps Sprint, Backs Dish Network

Clearwire's board of directors is now unanimously in favor of Dish's $4.40-per-share merger offer. Shareholders will meet June 24. 

Clearwire's board of directors has decided it very much likes the look of Dish Network's $4.40-per-share takeover bid—much more than Sprint's $3.40-per-share bid—and has decided to back the satellite television provider's latest offer to merge.

The board announced June 12 its "unanimous recommendation of the Special Committee consisting of independent, non-Sprint-affiliated directors" to accept Dish Network's cash tender offer to acquire all outstanding common shares of Clearwire for $4.40.

It also "unanimously recommended" that stockholders now vote against the "$3.40 per share Sprint merger and related matters."

Sprint currently owns approximately half of 4G-provider Clearwire, which controls a tremendous amount of spectrum. In December 2012, Sprint entered a deal for $2.97 per share, or roughly $2.2 billion, to buy the remainder of the company.

That deal was moving along until on Jan. 8 Dish Network made an unsolicited bid of $3.30 per share.

Sprint quickly responded, saying in a statement the same day that 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."

Nonetheless, on May 21, Sprint increased its offer to Clearwire to $3.40 per share, and in a May 28 letter Clearwire's board of directors advised stockholders to accept the offer.

On May 29, Dish raised its bid to $4.40, where it stands now, and Clearwire postponed its planned May 31 shareholder vote to June 13.

On June 3, Sprint worked to bolster its position, writing to Clearwire's board of directors that the Dish proposal violates Clearwire's Equityholders' Agreement, as well as Delaware law.

Dish Chairman Charles Ergen responded, saying Sprint was trying to mislead Clearwire stockholders, and that Dish's offer for Clearwire "provides a meaningful alternative to the significant group of your minority stockholders that remain opposed to the Sprint merger."

Dish's offer of $4.40 was originally to expire at the end of the day June 28, but on June 12, Dish extended it to July 2.

The Tangled Dealings of Sprint, Clearwire and Dish Network

Clearwire, announcing its unanimous support for Dish's offer June 12, said that the deal is subject (as Sprint had pointed out) "to various conditions, including the tender of more than 25 percent of the fully diluted voting stock in Clearwire and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act."

In a June 12 filing with the Securities and Exchange Commission, Clearwire said that its board of directors intends to adjourn the June 13 special meeting of the stockholders and reconvene "at a later date."

Throughout the time that Sprint and Dish have traded bids for Clearwire, Dish has been trying to undo Japanese carrier Softbank's deal with Sprint. Months after Softbank and Sprint's October 2012 announcement of their $20.1 billion deal, Dish offered Sprint $25.5 billion to merge.

Further complicating the matter, on May 6 Dish's Ergen made a move to acquire a more than 50 percent share of Sprint common stock.

Sprint duly considered Dish's merger offer, but on June 10 it announced that it had "ended its discussions" with Dish. In the same statement, it said that Softbank had sweetened the deal for Sprint shareholders, offering them an additional $4.5 billion—bringing shareholders' takeaway to $16.64 billion, and that Sprint shareholders will vote on the Softbank deal June 25.

So, as it stands, the deal now waits for the end of June. On Monday, June 24, Clearwire shareholders will have a special meeting in Kirkland, Wash., and on June 25, Sprint shareholders will vote on the Softbank merger.

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