Dish Network (NASDAQ: DISH) asked the FCC to pause its review of Softbank's proposed $20.1 billion acquisition of 70 percent of Sprint Nextel (NYSE:S) so that Dish can resolve issues related to its bid for Clearwire (NASDAQ:CLWR), which Sprint still hopes to acquire for $2.2 billion.
The latest regulatory maneuvering, while expected, comes as more of Clearwire's minority shareholders express concern that Sprint's offer for Clearwire is too low. Sprint last month made a $2.97 per share, or approximately $2.2 billion, offer to buy the 49 percent of Clearwire shares that Sprint does not already own.
Dish's unsolicited counteroffer was $3.30 per share, but also has several caveats about spectrum leasing and network management. A special committee of Clearwire's board is reviewing Dish's offer. Sprint has laid out a number of reasons Clearwire could not enter into a transaction with Dish, including that Clearwire is prohibited from selling spectrum without Sprint's consent; further, Sprint has said it thinks its offer gives "Clearwire shareholders a more certain price and path to close."
In its FCC filing, Dish wrote that Softbank's deal for Sprint is "unripe for consideration" because the fate of Clearwire is still up in the air. The Sprint-Clearwire deal is contingent upon closing of Softbank's deal for Sprint. "With competing offers for Clearwire in place, premature commission evaluation of Sprint's initial offer could undermine the commission's policy objective of neutrality in takeover contests by giving Softbank and Sprint a very real advantage in the corporate valuation process," Dish wrote.
Sprint and the FCC declined to comment, according to Bloomberg.
Meanwhile, more Clearwire minority investors are voicing their frustrations with Sprint's offer for Clearwire. Glenview Capital Management, which owns about 28 million Class A Clearwire shares, is expected to reject Sprint's current offer, according to a Bloomberg report, which cited an unnamed source with direct knowledge of the situation. Taran Asset Management, another Clearwire investor, will file an FCC complaint alleging that Sprint is undervaluing Clearwire, according Chris Gleason, a principal at the New York-based firm.
"Sprint has the ability to get the deal done if they increase their offer," Gleason told Bloomberg. "To pretend they don't have to raise their bid is silly."
Mount Kellett Capital Management, another minority Clearwire shareholder, said earlier this week that Clearwire should thoroughly consider Dish's offer. According to Dow Jones Newswires, Mount Kellett wrote to Clearwire's board that Dish's $3.30 per share offer shows that Clearwire "utterly capitulated to Sprint's demand to sell the company at a grossly inadequate price." Clearwire declined to comment, according to Dow Jones.
Analysts think that Sprint will ultimately prevail in its quest to acquire Clearwire, but it may be forced to increase its bid. "Sprint controls the show, and they could eliminate Dish's involvement if they picked off some investors," BTIG analyst Walt Piecyk told Bloomberg. "But that would involve increasing their bid."
- see this FCC filing
- see this Bloomberg article
- see this CNET article
- see this separate Bloomberg article
- see this Dow Jones Newswires article
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