Dish tried to move in on Sprint's turf, presenting a potential bid for Clearwire - Image credit:... [+]
About a month after the Sprint-Clearwire deal appeared to have been set in stone, Dish Network came out of left field with an unsolicited proposal to buy Clearwire for $3.30 a share in cash. The new, potential deal is higher than Sprint’s $2.97 a share offer, but is “not viable” according to Sprint, which owns about 50% of Clearwire. Because of fiduciary duty, Clearwire’s Board has announced it will look into the proposal.
Dish’s “preliminary indication of interest” consisted of several different, interrelated possible deals. One option is a spectrum purchase of 11.4 billion MHz-POP of spectrum (or 24% of Clearwire’s total) for $2.2 billion plus an option to buy more. Dish also suggested it could buy up to all of Clearwire for $3.30 a share in cash.
Other options include a commercial agreement in which Clearwire helps Dish build and operate a network covering AWS-4 spectrum and new developments of 2.5 GHz spectrum, an agreement to pre-fund Dish’s spectrum purchase through senior unsecured debentures, and an offer to provide financing like Sprint’s, among other options.
Sprint quickly responded to the announcement, calling the potential deal “not viable” given the set of conditions it postulates plus the fact that Sprint, which owns about 50% of Clearwire, would have to waive its own shareholder rights, which it won’t.
As mobile telephones become more widespread, spectrum has increasingly become more valuable. Last year, the Justice Department blocked a potential merger between AT&T and T-Mobile arguing it would lead to too much concentration; AT&T had noted that additional spectrum would’ve allowed it to improve service and upgrade its network. Dish’s attempt to poach Clearwire from Sprint is an attempt to get its hands on some of this valuable asset.
Tuesday’s announcement, which came during the after-hours session, caused Clearwire’s stock to be initially halted by the exchange. The stock was up 8.6% to $3.17 by 6:46 PM in New York. Shares in Dish remained unchanged at $35.97, while Sprint fell 2.4% to $5.83.
