Sprint Raises Bid for Clearwire, Adds $115M Kill Fee to the Deal

Days ago, Clearwire was accepting Dish's bid. Now, it has accepted Sprint's offer of $5 a share, which includes a termination fee.

Sprint announced June 20 that it has increased its bid for the nearly 50 percent of Clearwire shares that it doesn't already own to $5 per share and has won the approval of the majority of Clearwire stockholders.

And with that, the drama between Sprint, Dish Network and Clearwire, for the latter's considerable trove of highly valuable wireless spectrum, entered a new phase.

Just last week, it was Dish Network that had the upper hand.

The Clearwire board of directors announced June 12 that it had made the "unanimous recommendation" to accept Dish's offer of $4.40 per share and "unanimously recommended" that stockholders vote against a merger with Sprint, whose high offer at the time was $3.40 per share.

On June 17, Sprint filed a lawsuit against Dish and Clearwire—which, again, it owns a 50.2 percent share of—saying that the Dish offer violates Delaware law and Clearwire's charter and Equity Holders Agreement (EHA), as well as accusing Dish of knowingly entering a bad deal.

Dish "has everything to gain from a failure of Clearwire," Sprint said in the suit.

Dish responded in a June 18 statement, calling Sprint's lawsuit a "transparent attempt to divert attention from its failure to deal fairly with Clearwire's shareholders, as well as to exploit its majority position to block Clearwire's shareholders from receiving a fair price for their shares."

At some point after filing its suit, Sprint upped its offer, as on June 20, Clearwire's board of directors announced they'd changed their recommendation.

"The Clearwire board and special committee have determined that the $5 per share transaction with Sprint represents the best path forward for the company and is in the best interest of our unaffiliated stockholders," Clearwire CEO Erick Prusch said in a statement.

Sprint, in its statement today, reported, "Together with the voting commitments previously received from Comcast Corp., Intel Corp. and Bright House Networks LLC, who collectively own approximately 13 percent of Clearwire's voting shares, and Clearwire's directors and officers, stockholders owning approximately 45 percent of the Clearwire voting shares not affiliated with Sprint, have now agreed to vote their shares in."

The Clearwire shareholders vote that was cancelled and rescheduled for June 24 has now been cancelled and rescheduled for July 8 (leaving room for the drama to potentially carry on).

The History of the Deal

On Dec. 17, 2012, Sprint and Clearwire announced an agreement for Sprint to buy the remaining shares of Clearwire for $2.97—a price that more than one analyst on a conference call about the deal questioned, saying it was overly generous. In Dec. 12 paperwork Sprint filed with the Securities and Exchange Commission (SEC) the agreed-upon price was said to be $2.90 per share.

Justifying the rate of $2.97, Sprint CEO Dan Hesse said: "The board and management team of Clearwire did a very good job, in terms of negotiating for their shareholders. But also at Sprint, we ... made sure we were being fair to both sets of shareholders."

In January, Dish stepped in, offering Clearwire $3.30 per share.

Since then, the price has continued to rise, with Sprint seeing and raising the bid modestly and Dish seeing and raising it more aggressively.

But that may be where it all ends. In addition to raising its offer, Sprint added a termination fee to the deal. If Clearwire terminates the deal, it will be required to pay "$115 million, or 3 percent of the equity value of the minority stake," Sprint said in its June 20 statement.

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