Dish Network has formally given up all attempts to buy Sprint Nextel, according to a regulatory filing, clearing the way for Japan's SoftBank to take control of Sprint and try to turn it into a more powerful force in the U.S. wireless market.
The whirlwind battle for Clearwire continues to swirl, as Clearwire's board of directors reversed itself yet again and now recommends Sprint's offer to buy the roughly 50 percent of Clearwire it doesn't already own for $5 per share. The move comes eight days after Clearwire's board recommended Dish Network's $4.40 per share tender offer for the company over Sprint's earlier $3.40 per share offer.
Now that Dish Network has said it will not make a new offer for Sprint Nextel, clearing the way for SoftBank to get control of Sprint, the most intriguing M&A question is: What will happen to Clearwire, which Dish and Sprint are both pursuing?
Dish Network said it will not make a new offer for Sprint Nextel to counter SoftBank's revised $21.6 billion proposal to control 78 percent of Sprint. The move paves the way for SoftBank to complete its proposed purchase of Sprint.
Sprint Nextel sued both Dish Network and partner Clearwire to block Dish's proposed $4.40 per share takeover bid of Clearwire. Clearwire said last week that its board recommended that shareholders approve Dish's offer over Sprint's $3.40 per bid to take control of Clearwire, but Sprint has argued Dish's offer is "not actionable."
Sprint Nextel made changes to its customer terms of service last month in preparation for the possibility that it could stop using Clearwire's WiMAX network before some customers' terms of service are up. The carrier said it wants to provide WiMAX smartphone customers with more options to get them to switch over to its LTE network, which Sprint has been steadily building out since last July.
Dish Network announced it recently completed a test of an LTE fixed wireless Internet technology that delivered speeds of 20 to 50 Mbps using 2.5 GHz BRS spectrum. Dish conducted the tests with regional wireless carrier nTelos, but Dish has said it would deploy virtually the exact same type of service if it is successful in purchasing spectrum from Clearwire.
Clearwire's board of directors unanimously recommended that shareholders accept Dish Network's $4.40 per share bid for Clearwire instead of Sprint Nextel's $3.40 per share offer to take control of Clearwire. Clearwire said it will delay until June 24 a vote on the transaction.
Dish Network faces a June 18 deadline to submit its "best and final" offer for Sprint Nextel, an effort complicated by the collapse of talks between Dish and Sprint over a reverse-breakup fee and Dish's need for more capital.
SoftBank's increased offer for Sprint Nextel indicates SoftBank CEO Masayoshi Son is prepared to go the distance. It is entirely possible that Dish Network's Charlie Ergen will increase his own bid for Sprint, but if Ergen is ultimately unable to defeat Son, what will Ergen do next?