Clearwire Board Accepts Sprints Offer To Buy For $2.2 Billion
The Clearwire Corp. board has approved the company’s purchase by Sprint Nextel Corp. for $2.2 billion. Sprint will acquire the remaining 50-percent stake it does not already own for $2.97 a share—a 2.5-percent increase over its original offer of $2.90 a share extended Dec. 13, and 128 percent more than the value of Clearwire stock in early October when the acquisition was first suggested.
Purchasing the remainder of Clearwire will allow Sprint—already a 51.7 stakeholder—to expand its wireless data services. The purchase was made possible by a $20.1 billion investment by Japan’s Softbank, which now has majority ownership of the No. 3 US mobile service provider.
“Today’s transaction marks yet another significant step in Sprint’s improved competitive position and ability to offer customers better products, more choices and better services,” said Sprint chief executive Dan Hesse. “Sprint is uniquely positioned to maximize the value of Clearwire’s spectrum and efficiently deploy it to increase Sprint’s network capacity.”
When Sprint extended its first offer last week, some analysts speculated Clearwire should hold out for at least $5 per share. Sprint, however, offered $800 million in interim financing for cash-strapped Clearwire. Although the board held out for a better deal, the $800 million offer stands.
“Strategically this is a good move for Sprint,” Joe Bonner, an analyst at Argus Research in New York, told Bloomberg. “Clearwire was a never-ending source of problems, and Softbank has the deep pockets to get it done.”
Clearwire shares have fallen more than 85 percent since its IPO five years ago. When the original Sprint offer was made Dec. 13, shares shot up 15 percent to $3.16. After today’s deal was announced, however, shares fell more than to $2.94 in midday trading. Sprint stock remained steady at $5.53.
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