Sprint, Clearwire Finally Get It Done

December 17th, 2012 by · 14 Comments

It's officially tentative now: clwr has agreed to be acquired by its majority holder Sprint Nextel (NYSE:S, news, filings) for $2.97/share for the half Sprint doesn't already own. Official because they've entered into a definitive agreement, and tentative because it won't close until after the Softbank transaction does and is probably going to face some minority shareholder challenges in the meantime.

The payout would amount to about $2.2B to Clearwire's other shareholders, and equates to an enterprise value of $10B given the net debt to be assumed and presumably refinanced. That's up from the $2.90 bid we heard about last week, but it's lower than the stock is currently trading at, as it finished up last week at $3.37 clearly on speculation that Sprint would (or will) be forced to pay more to get its hands on all that 2.5Ghz spectrum.  I doubt we have heard the last of this.

It's always a bit messy when a majority shareholder negotiates with its subsidiary for a price, but in this case the minority shareholders included Comcast, Intel, and Bright House Networks - not exactly easy names to push around. But each is probably just happy to end its unsuccessful foray into WiMAX at this point.  Each has committed to voting for the deal, and they hold a combined 13% of the voting shares.

Sprint has also agreed to provide Clearwire with up to $80M/month in financing for up to 10 months in the form of notes exchangeable for stock at $1.50/share. That will let Clearwire get on with its LTE buildout, presumably, thus complementing Sprint's own efforts and converging on a common effort when the deal finally closes.

Clearwire has been one of the more interesting stories of the past five years, challenging the status quo by building a brand new 4G network from scratch. They built it, but it just cost too much along the way and the money didn't hold out. Their spectrum holdings are a major prize though, which is why Sprint is willing to spend billions to acquire a business with Clearwire's huge debt, limited revenue, and impressively fiery cash burn.

But they couldn't and wouldn't do it without Softbank's investment, taking a 70% stake in Sprint. Softbank is assembling what it hopes to be a strong third pillar of American wireless a few years down the road.

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Categories: Mergers and Acquisitions · Wireless

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14 Comments So Far


  • mhammett says:

    I’m waiting for some people to start complaining about XO and minority shareholders. I’m surprised it hasn’t already happened.

  • Fiber Maps says:

    Sprint’s acquisition of Clearwire will enable the company to better serve its current and future clients by offering more choices and improved services. Moving forward with this deal with Clearwire now puts Sprint in a good position to build out its 4G LTE network. The deal gives Sprint full control of Clearwire’s notable spectrum, as well as its existing 4G WiMax network, which Sprint will upgrade to 4G LTE next year.

  • CarlK says:

    Minority shareholder, “Crest Financial,” is going to “smoke” Sprint and Softbank “out” with their amended class action all in public lawsuit. This theft of valuable property should not stand. imo

    http://www.bancroftpllc.com/crest/

  • CarlK says:

    Great risks are commensurate with great rewards that are still forthcoming notwithstanding this grand scheme to steal valuable assets. imo

  • Brker_guy says:

    CarlK what are you smoking??? Go back to your Level 3 coal mines and burn that, instead of rubbing two sticks together. Sprint and Clearwire in a done deal At 2.97.

    Stop crying over the rising sun taking your worthless spectrum.

    • CarlK says:

      Brker_guy, I know “Brker_guy,” I have worked with “Brker_guy,” I am friends with “Brker_guy,” but Brker_guy, you are no “Brker_guy” no matter how hard you try! Carl Bentsen, Lloyd’s son.

      http://www.youtube.com/watch?v=O-7gpgXNWYI

      “We’re smoking em out, they’re running, and now we’re going to bring them to justice”…… at about the 34 second marker.

      http://www.youtube.com/watch?v=DRyV1sVEOG8

      As for Big (3)’s coal mines no longer dirtying up “our” balance sheet, wait till the day these buffoons on Wrong Street start valuing the fiber in my diet correctly!

  • not Dennis Miller says:

    you, Carl K., can post more arcane references than even me, my friend

    • CarlK says:

      This board’s host has been able to crack my code at least partially, for some time now. 🙂

      I will make it easy for you this time in order not to burden him. There’s a Brker_guy impostor who is NOT the real Brker_guy who contributes to “The Corner of Berkshire & Fairfax” board.

      As for The Bush Family smoking their enemies out, it seems there is a Bush brother deeply involved with Crest Financial, one of at least two large shareholder activists shaking the Clearwire trees. Will Hesse The Huckster fall out, and break a few limbs?

      Speaking of Bush Family Dynasties, apparently George H. W. remains in intensive care through Christmas.

      http://abcnews.go.com/blogs/headlines/2012/12/george-h-w-bush-fighting-fever-in-icu/

  • Telecom Hard Truths says:

    Sprint + clearwire + level3 = nothing. absolutely nothing.

    Add in XO and some more null sets if you’d like.. (Hint: doesn’t change the answer).

    No net profits, no tangible shareholder value. Nada.

    Meanwhile (sadly) legacy-current monopolies like T, VZ and NTT continue to take over the world with capital resources unmatched by the rest of the industry (combined).

    Perhaps in 2013 we can blog/flame/debate that one.

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