Sprint increases its offer for Clearwire, hopes to stave off Dish

Sprint Nextel (NYSE:S) boosted its offer price to acquire the approximately 50 percent of Clearwire (NASDAQ:CLWR) it does not already own from $2.97 per share to $3.40, caving to the demands of minority Clearwire shareholders and blocking Dish Network's (NASDAQ: DISH) unsolicited $3.30 per share offer for Clearwire.

Clearwire said the special committee of its board will review Sprint's new offer. A meeting that was scheduled to take place today for shareholders to vote on Sprint's original proposal has been pushed back to May 30.

The new offer represents a roughly 14.5 percent increase to Sprint's previous offer and compares to Clearwire's closing price Monday of $3.26 per share. Clearwire's board has urged shareholders to approve the Sprint offer as its last, best hope of financial survival, but minority shareholders have said there are better choices for the company. It is unclear if their concerns will be assuaged by the new offer.

For Sprint, the prospect of shareholders voting down its proposal was apparently real enough to make an improved offer. SoftBank, which is competing with Dish to acquire control of Sprint, needed to sign off on any increased offer, and several weeks ago SoftBank CEO Masayoshi Son said he did not see a need for Sprint to raise its bid. He contended that since Comcast, Intel and Bright House Networks have agreed to sell their collective 13 percent voting stake in Clearwire to Sprint, it would give Sprint the ability to block third parties from acquiring Clearwire.

Before it bid $25.5 billion to acquire Sprint, Dish in January made a $2.2 billion bid for Clearwire, hoping to acquire Clearwire spectrum covering approximately 11.4 billion MHz-POPs, or around 24 percent of Clearwire's total spectrum holdings. As part of the deal, Clearwire could sell or lease an additional 2 MHz of its spectrum to Dish and it could also provide certain services such as network management, construction and maintenance for a network in the AWS-4 spectrum.

Further complicating the situation is Verizon Wireless' (NYSE:VZ) unsolicited offer last month to Clearwire to purchase Clearwire's spectrum license leases in major markets for up to $1.5 billion.

Minority Clearwire shareholders, including Mount Kellett Capital Management and Crest Financial, had urged shareholders to block the $2.97 Sprint offer, arguing that it undervalues Clearwire and its spectrum resources. Crest filed a 40-page presentation with the Securities and Exchange Commission earlier this month, detailing why it thinks the Sprint deal undervalues Clearwire and its spectrum holdings.

The new Sprint offer also comes less than two weeks after two leading shareholder advisory firms offered contrasting views on whether Clearwire shareholders should approve Sprint's original offer. One of the firms, Institutional Shareholder Services, said Clearwire shareholders should vote in favor of  Sprint's offer, saying the deal is of an appropriate value and that it should be approved given ongoing concerns about Clearwire's ability to survive as a standalone company.

While the opinions of advisory firms are not binding on shareholders, they can sway both investors and companies. After ISS and Glass, Lewis & Co., opposed Deutsche Telekom's offer in the merger between T-Mobile USA and MetroPCS to create T-Mobile US (NYSE:TMUS), DT improved the terms of its offer (the original proposal was also criticized by major MetroPCS shareholders as inadequate).

For more:
- see this release
- see this Bloomberg article
- see this TechCrunch article

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