Dish Network's (NASDAQ: DISH) unsolicited $3.30 per share counterbid for Clearwire (NASDAQ:CLWR) will force Sprint Nextel (NYSE:S) to raise its $2.97 per share offer to match it, according to a Bloomberg report.
Clearwire's stock is now trading at $3.32 per share, and the increase in the stock price, coupled with Dish's counterbid and a growing chorus of minority Clearwire investors, could cause Sprint to push its $2.2 billion bid higher. The report said that traders are betting Sprint will hike its bid by 11 percent, to around $3.30 per share, more than any other similar-sized deal pending in North America, according to data compiled by Bloomberg.
At stake is Clearwire's vats trove of spectrum; Clearwire commands around 160 MHz of spectrum in the top 100 markets, and Sprint has said its Network Vision network architecture would allow it to efficiently deploy TD-LTE on the airwaves. Dish's counterbid is highly conditional, and it likely will not succeed because Sprint, as the majority owner of Clearwire, would need to agree to the terms. Still, the pressure is on Sprint to increase its offer, given mounting voices of discontent and legal action from minority Clearwire shareholders like Crest Financial Glenview Capital Management, Mount Kellett Capital Management and Taran Asset Management.
"Sprint continuing to stand by this $2.97 bid is not going to work," Keith Moore, an event-driven strategist at MKM Partners, told Bloomberg. "The Dish bid is illusionary. But Sprint still has the problem of having to get enough shareholders to support them."
Clearwire declined to comment, according to Bloomberg, but Sprint repeated that its "agreement to acquire Clearwire is superior to the highly conditional Dish proposal and offers Clearwire shareholders certain and attractive value."
Analysts, including BTIG analyst Walter Piecyk, have said that Sprint can dispense with Dish's counterbid and get approval for its own offer to buy the rest of Sprint's share, but that it will need to get the support of minority shareholders. To do that, they argue, Sprint will need to increase the price of its offer.
- see this Bloomberg article
Dish urges FCC to halt review of Softbank/Sprint deal
Dish trumps Sprint with surprise bid for Clearwire
Clearwire investor Crest to urge FCC to block Sprint/Clearwire deal
Sprint to buy Clearwire for $2.2B
Sprint sets migration path for Clearwire network, spectrum
Softbank to buy 70% of Sprint for $20.1B