Clearwire leaves door open to Dish's offer, but still recommends Sprint deal

Clearwire's proxy statement details dealings with multiple parties
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Clearwire (NASDAQ:CLWR) said it is still considering Sprint Nextel's (NYSE:S) $2.97 per share offer to buy the 50 percent of Clearwire that it does not already own--and Clearwire is still considering Dish Network's (NASDAQ: DISH) unsolicited $3.30 per share counterbid for Clearwire. However, Clearwire said its special board committee that is evaluating the deals has not changed its recommendation to accept Sprint's bid.

In a Securities and Exchange Commission filing, Clearwire goes to great lengths to detail its efforts during the past several years to seek strategic partners, wholesale customers and alternatives beyond working with Sprint, which is Clearwire's majority owner. 

Clearwire's filing reveals that toward mid-2011, Clearwire engaged in preliminary discussions with Dish about possible wholesale or other commercial arrangements, but that none of those discussions went beyond the preliminary stage. Dish made an offer to Clearwire in August 2012 to buy its spectrum and enter into a commercial agreement for $2.19 billion. Clearwire CEO Erik Prusch asked Dish to consider buying the common Clearwire stock held by public shareholders, which Dish declined to do. Also throughout this period, Clearwire had frequent discussions with Sprint regarding its financial condition and strategic direction, and potential strategic transactions for Clearwire with Sprint and with other parties.

On Dec. 13, Sprint made an offer of $2.90 per share to buy Clearwire, worth a total of $2.2 billion. Clearwire had been pushing for an offer price of $3.15 per share, but Sprint CEO Dan Hesse informed Clearwire Chairman John Stanton that $2.97 per share was as high as Softbank would permit Sprint to bid for Clearwire. On Dec. 16 the special committee of Clearwire's board reviewing Sprint's offer recommended that the full board approve the agreement. On Dec. 17 Clearwire's board approved the $2.97 per share offer from Sprint.

Then, on Dec. 28, Dish Chairman Charlie Ergen indicated to Clearwire that Dish would make a revised offer consisting of the purchase of 11.4 billion MHz-POPs, which is approximately 24 percent of Clearwire's total spectrum holdings, for $2.18 billion, certain commercial arrangements and, for the first time, an offer to acquire up to all of Clearwire's outstanding shares at $3.30 per share. On Jan. 8, Dish's offer was made public and Clearwire's board said it would consider it.

Financial analysts have said that Dish's bid is unlikely to succeed. However, Dish's bid, along with pressure from Clearwire's minority shareholders, could motivate Sprint to raise the value of its final offer for Clearwire. The dealings come against the backdrop of Softbank's $20.1 billion deal to acquire 70 percent of Sprint, which still requires regulatory approval.

Clearwire also said that it has not drawn on the $800 million in interim financing Sprint offered to Clearwire as part of Sprint's deal to acquire Clearwire. Dish said it would withdraw its proposal if Clearwire took the money. Clearwire said it must make a decision on whether to take Sprint's financing by Feb. 28.

Clearwire and Dish declined to provide additional comment.

"Clearwire's proxy makes very clear that Sprint's definitive agreement to acquire Clearwire provides both the best value for shareholders and stability amid an uncertain future," Sprint said in response to Clearwire's latest filing. "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. We are pleased the Clearwire board continues to recommend approval of our transaction and look forward to closing our merger and delivering even greater wireless service to the American consumer."

For more:
- see this release
- see this SEC filing
- see this Reuters article
- see this Bloomberg article

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