Clearwire reverses and recommends Sprint's new bid over Dish

The whirlwind battle for Clearwire (NASDAQ:CLWR) continues to swirl, as Clearwire's board of directors reversed itself yet again and now recommends Sprint Nextel's (NYSE: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 (NASDAQ: DISH) $4.40 per share tender offer for the company over Sprint's earlier $3.40 per share offer.

Analysts had been urging Sprint to increase its offer and outbid Dish, particularly after Dish said it would not make a new formal offer for Sprint, clearing the way for Japan's SoftBank to take control of 78 percent of Sprint for $21.6 billion.

Sprint's new offer values Clearwire at more than $14 billion, or $0.30 per MHz pop, according to Clearwire. The new offer equates to a total payment to Clearwire's minority shareholders of around $3.9 billion, and represents a 47 percent premium over Sprint's prior offer of $3.40 per share and a 14 percent premium over Dish's tender offer.

The Clearwire shareholder vote that was supposed to take place June 24 has been pushed back yet again, and will now take place on July 8. A Dish spokeswoman did not immediately respond to a request for comment.

At stake is Clearwire's trove of 2.5 GHz spectrum, which Sprint hopes to use for a TD-LTE offload network. Clearwire commands around 160 MHz of spectrum in the top 100 markets, and Sprint has said its Network Vision network architecture allows it to efficiently deploy TD-LTE on the airwaves. Sprint has said that, if the Clearwire deal closes by mid-year, it can begin launching devices in the late third quarter that take advantage of TD-LTE on Clearwire's spectrum. That timeline will likely be pushed back a little bit if Sprint's bid for Clearwire gets consummated.

We believe Clearwire is a critical component of the Sprint/SoftBank plan," wrote New Street Research analyst Jonathan Chaplin in a research note. "This move eliminates a great deal of uncertainty; however, the company [Sprint] is spending $1.2 billion more than they wanted to." 

BTIG analyst Walter Piecyk, who had been advocating for a $5 per share price for Clearwire for around six months, said that the new Sprint offer should be enough to persuade recalcitrant minority Clearwire shareholders such as Mount Kellet Capital Management to go along with the deal. "I think other shareholders will fall in line," he told FierceWireless.

"We always wondered why it took Sprint so long," he said. "They [Sprint] probably could have wrapped this up sooner."

Dish said it has formally given up all attempts to buy Sprint, according to a regulatory filing, clearing the way for SoftBank to take control of Sprint. In a filing with the Securities and Exchange Commission, Dish said it "decided to abandon its efforts to acquire" Sprint, and, as a result, it will buy back $2.6 billion of bonds that it had issued in May to help fund its acquisition. Sprint shareholders will vote on SoftBank's proposal June 25; the deal also still needs FCC approval.

"We believe that Dish really wanted 40 MHz of Clearwire spectrum," Chaplin wrote. "We view the Sprint/Clearwire deal as a modest setback for Dish; however, they have a tremendous amount of capacity with the 46 MHz of spectrum they have already secured and they may still be able to acquire LightSquared spectrum. In addition, there will likely be other spectrum opportunities before they exhaust what they have." 

For more:
- see this release

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