Sprint Raises Takeover Bid, Clearwire Accepts

Sprint finally raised its offer to buy out Clearwire's shares to above that of Dish Network. Clearwire announce May 22 that it has accepted.

Clearwire has accepted Sprint's bid to buy the approximately 50 percent stake in the 4G provider that it doesn't already own.

Sprint increased its offer for the Clearwire shares on May 21 to $3.40 per share, up from the $2.97 of its Dec. 17, 2012, offer.

The increase, said Sprint, represents a 162 percent premium on Clearwire's closing price Oct. 11, 2102—the day before Sprint and Japanese carrier Softbank announced a merger deal.

A special committee of Clearwire's board of directors determined that the offer is fair, favorable and in the best interest of Clearwire's stockholders, the company announced May 22.

Clearwire stockholders will now need to vote on the matter, during a special meeting May 31.

In January, Dish Network tried to muscle aside Sprint (which it is now trying to merge with), offering Clearwire $3.30 a share, though as part of a more complicated deal.

"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," Chris Gleason, a principal at Taran Asset Management, told Bloomberg at the time of the Dish offer, expressing a popular sentiment.

Sprint, however, believing its offer to be superior, at first resisted.

"We continue to believe that the Dish proposal is illusory and conditioned on many things, including the receipt of governance rights, a spectrum sale and a commercial agreement, which are not actionable under our merger agreement and other agreements between Clearwire and Sprint," Sprint said in a Feb. 1 statement, after Clearwire filed preliminary documents with the Securities and Exchange Commission regarding its initial agreement with Sprint.

In the proxy, Clearwire—which pursued opportunities with at least 10 other companies before settling on Sprint—told its shareholders they had no real alternative.

"If the Merger is not completed, we may be forced to explore all available alternatives, including financial restructuring, which could include seeking protection under the provisions of the United States Bankruptcy Code," Clearwire warned in the proxy statement.

In a May 13 letter, Clearwire's board of directors mailed shareholders a letter, urging them to vote for the Sprint transaction and disputing, point-by-point, popular "misperceptions" regarding the deal. These included the possibility of selling its spectrum to a number of parties (a Multi-Customer Case); that Sprint's spectrum valuation was below market; and that bankruptcy would result in more value for shareholders.

"The proposed transaction with Sprint provides a clear solution to the substantial funding gap Clearwire is facing," the directors urged. "Absent the Sprint transaction, Clearwire's prospects of securing the $2 [billion] to $4 billion in additional funding necessary to continue operations and the LTE build plan are highly uncertain."

Clearwire's considerable spectrum holdings would be a major boon to Sprint, as it builds out an LTE network alongside the 4G WiMax network it collaborated on with Clearwire. With mobile devices consuming fast-rising amounts of mobile data, the wireless carriers are in aggressive pursuit of ever more spectrum. While Softbank's deal with Sprint wasn't contingent on the Clearwire deal going through, having Clearwire's spectrum on their side will enormously help the pair as they work to position Sprint to more aggressively compete with Verizon Wireless, AT&T and even T-Mobile

"We believe this transaction, particularly when leveraged with our Softbank relationship, is further validation of our strategy and allows Sprint to control its network destiny," Sprint CEO Dan Hesse said December, following his initial bid for the Clearwire shares.