Sprint Offers $2.1B For the Rest of Clearwire

December 13th, 2012 by · 21 Comments

The rumors finally panned out, as a regulatory filing this morning revealed that Sprint Nextel (NYSE:S, news, filings) has proposed to buy the 49% of Clearwire that it doesn't own at $2.90 per share. That would total about $2.1B if it comes to pass, but this is still early in the process. 

Sprint is after Clearwire's extensive spectrum holdings, but it will also likely find a way to put the modern backhaul infrastructure it has assembled to more productive use.  Sprint has been actively building out LTE, and has long planned to make Clearwire's potential capacity part of its plans.

Sprint would be providing up to $800M in interim financing via monthly installments to keep Clearwire building as the process drags on. And drag on it would of course, since there is still the Softbank transaction, which as expected would need to be consumated first.

This potential consolidation changes little, and will have been expected by all parties although perhaps not the specific timing. But that doesn't mean it won't stir things up. I give it a week at the outside before AT&T details its complaints about Softbank/Sprint's potentially outsized spectrum holdings. And Crest Financial has *already* filed a lawsuit to stop just this sort of thing, claiming that as a minority Clearwire shareholder they would get the shaft in any such transaction. They're mostly looking for leverage on the final price of course.

If Sprint can do some wireless consolidation like this, it can surely do something on the wireline side too. Softbank is looking forward having all the pieces in place when it takes over, rather than leave all the housecleaning to next year. Perhaps they and Sprint will also decide what to do with Sprint's wireline business this winter.

 

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Categories: Mergers and Acquisitions · Wireless

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21 Comments So Far


  • CarlK says:

    Sprint said in a regulatory filing Thursday that its board reviewed the offer, which works out to $2.90 per share. Sharees of Clearwire Corp. jump 13 percent to $3.11 in premarket trading.

    http://finance.yahoo.com/news/sprint-pay-2-1b-remaining-141952486.html

  • CarlK says:

    “Proposal, proposal, proposal.” In a system said to be structured on “CAPITALISM,” a proposal is nothing more than an “introduction” of a subjective price issued by one party before others value the “assets” being focused upon for more as a result of their own calculus.

    The U.S. “spectrum” asset continues to be described as “scarce” with a tsunami of demand tied to mobile communication devices coming straight for it loaded up with “VIDEO” representing large swaths of the data crossing over networks both mobile and fixed.

    The owner of this valuable CLWR spectrum asset could sell excess “spectrum” greater than their own use for much more than this all in enterprise value of approx. $7.5B.

    I am a foreign investor, and I “PROPOSE” to steal the assets representing part of The United States of America! Who is going to let me!

    Bidda, bidda, bid, and WHO else will those “BIDDERS BE”? imo

  • CarlK says:

    The last time the Japanese people over in the land of The Rising Sun defecated by decimating “military assets” in “territories” influenced by U.S. Forces, they paid a very DEAR PRICE for their boldness. It was a day that continues to live in infamy!

    How will this “CLWR” spectrum asset so “crucial” to the well being of U.S. citizens be handled at this juncture considering a host of issues beyond “security”?

    Who will these new bidders be while Softbank is acting so bold? imo

    • WTF says:

      Skip the nationalism and stick to the facts. Make the argument, but don’t make an ass of yourself in the process.

      • Anonymous says:

        Agreed.

      • CarlK says:

        NATIONALISM aside, it’s good to witness investors as well as “traders” with many ROOTS in America, letting that SOB, Mr. Son, truly a Korean hiding in Japanese clothes that, you will not “DICTATE” price “ceilings” on our “VALUABLE AIRWAVES” if you want to be a player in this CAPITALISTIC SYSTEM!

        As for Dan, The Huckster,” Hesse over at Sprint, he may end up being caned, Singaporean style before this is over.

        And, for whomever is “SHORT,” I damn well hope to the highest heavens where NO CEILINGS are placed, that Enron’s “GOLDMAN SUCKS” is part of that IDIOTIC trade! imo

  • en_ron_hubbard says:

    Here is the essence of the deal as set out in Sprint’s SEC filing:
    — The offer will require the approval of the independent directors and a majority of the non-Sprint shareholders.
    — The other significant shareholders– Comcast. Intel and BH have agreed to the $2.90 price, will vote for the deal, and have given Sprint an option to acquire their holdings at $2.90 if the deal is not approved by the CLWR shareholders. These holdings represent ~ 25% of all shares not owned by Sprint.
    — Sprint has offered interim financing of $800 million subject to agreement on the acquisition itself which will allow continued build out of the spectrum prior to a closing.

    The fact that unconflicted insiders have agreed to the $2.90 price is instructive. The fact that Sprint can elect not to sell their holdings to a third party is a powerful disincentive for anyone else to get involved in the situation. The fact that 2.5GHZ spectrum, given its propogation characteristics, is of significantly lower value than other frequencies that have sold recently is important to understand.

    Bottom line I believe there is only one buyer for CLWR which puts the board in an awkward position. A reasonable expectation is the price gets upped by 10-15 cents and closes simultaneous with the Softbank deal.

  • CarlK says:

    “Unconflicted insiders” in the cable industry could only be written by a Wall Street Insider with a Goldman name plate attached to his anonymity.

    Would you like to discredit the contents of Mr. Dinh’s lawsuit on behalf of “VESTED INSTITUTIONS” as well?

  • Brian Griffin says:

    CarlK – you should start your own blog. You provide a lot of insightful comments, and I for one would like to follow your writings on a daily basis. I learn a tremendous amount from you.

    • en_ron_hubbard says:

      Brian,

      I would second your request that CarlK start his own blog. I too would look forward to following his thinking on a daily basis— although that is not a commitment on my part.

      As you look at his body of work as evidenced by comments on this site and elsewhere you just can’t help but be struck by the deep insights he brings to the table– particularly those involving conspiracy theory, etc., and the particular and obsessional (if you didn’t know better) fixation on Goldman Sachs. He is clearly a force to be reckoned with in the investing universe and I am somewhat surprised that certian people view him as a village idiot.

      • CarlK says:

        Thanks Enron_Blow_Hard. I guess that’s why I used to be a fan of The Village People during my YOUT. We have been down this road too many time before here and elsewhere, haven’t we? A conspiracy by “DEFINITION” is easy to claim almost anywhere human interaction is taking place, but I digress.

        It appears as though some of my other Village Idiot friends do not see the “MATH” like you or the WRONG STREET Pedigrees you conspire with on a daily basis.

        You should open your mind more to other Village Idiots by checking them out! Oh, that’s right, you claim that you do in order to get a feel for The Zeitgeist that is in play.

        As for the other idiot on your side disclaiming “nationalism” for “facts,” his point is valid only because Wrong Street is consistently and persistently building their “NEW WORLD ORDER” via MYTHS surrounding “CAPITALISM,” partially applicable here as they attempt to “STEAL” the “CLWR” asset with a “TAKE UNDER” which may indeed result in a more efficient “global solution” assuming Softbank gets its greedy paws around that spectrum.

        They still have to PAY the PIPER more than three, however. imo

        http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/clwr-clearwire/450/

      • CoCo says:

        I sure hope you guys are being jokers, or trying to coax him off this site. Each passing month his rambling, incoherent posts have made this entire website sound more like a combination of the truthers and the Colorado/Washington legalization movement – and a side of antipsychotic meds withdrawal.

        • Anonymous says:

          CoCo, I agree with your Carlk comment. He’s the Telecom Ramblings Village Idiot. (On a side note, I think Colorado/Washington outcomes were quite rational.)

          • CoCo says:

            No argument from me, being a Coloradoan. That doesn’t change the endless jokes and hilarity at our expense, though. It’s funny because its all true.

  • CarlK says:

    You are too kind to me, Brian Griffin, but I thank you for your compliment. Nope, I had resigned against that idea some time ago, even while criticizing Mr. Powell while he was starting this blog and retreating from nether lands which was truly wrong on my part because he has established one of the most informative “telecom investing” sites on Planet Earth as far as I can tell.

    I am just an average speculator who enjoys sharing his decades long experiences–both good and bad– with the bad being the greatest “teachers” of them all; in order to benefit any others who might be listening where I have vested interests one way or another.

    From my perspective and math, Enron’s five or ten cents undershoot comment, is at least $1.05 to as much as $3.05 off depending upon how this finishes playing out.

    He should stick to writing dissertations about why some greater FOOL than GOLDMAN–maybe CenturyTel–is going to pay $30 pps or more for what used to be a cable company’s “slow growth” telecom company that is being ascribed a noise bleeding multiple already over at twtc.

    Mr. Dinh and the people he works for are lesser fools than Enron…..who the hell is he again? imo

  • CarlK says:

    “The Village Idiot,” once a fan of “The Village People” during his “YOUT”–take off on “My Cousin Vinnie”–found this interesting with reference to Softbank’s blatant “theft” of valuable U.S. airwaves, err, PROPERTY. imo

    http://www.marketwatch.com/story/mount-kellett-sends-second-letter-to-the-board-of-clearwire-2012-12-14

    First, we believe the consideration of $2.90 per Share to grossly undervalue Clearwire. Second, the convertible debt financing proposed by Sprint, which would be put in place prior to stockholder approval of the Sprint proposal, together with the threatened purchase of Comcast, Intel and BHN (the “Strategic Investors”) 13% stake in Clearwire in the event that the public stockholders turn down the Sprint proposal, is a clear threat to the minority stockholders to vote in favor of the Sprint proposal or face the dilution of the value of their stake in the Company from the convertible debt and an ultimate squeeze-out transaction when Sprint achieves a 90% ownership stake.

  • Brker_guy says:

    Clearwire’s spectrum will lose it’s value when the unused TV white space spectrum is put into play by the FCC. Microsoft and Google are very busy with plans to use TV white space spectrum.

    • mhammett says:

      That’s assuming that the TVWS doesn’t go unlicensed with the predominate users being Fixed Wireless Broadband providers. Wait, it’s already there, though I know the cellcos are bantering the FCC about it.

      Lower frequencies allow you to go further, but that becomes a problem when trying to reuse frequencies and providing big throughput.

      The big three will all have LTE under 1 GHz, so Sprint is the winner with large chunks of spectrum up high.

  • CarlK says:

    Enron, you are the most gifted anonymous Goldman Tool in this Shed having pin pointed that five to ten cents missing value for my low priced Clwr shares. Although the battle is far from over irrespective of headlines, this board should be wondering about your greatness. I still expect to be paid more than this “take under” regardless of your short term, uncanny prescience in the matter.

    In the mean time, I guess I should buy that NO GROWTH twtc pump you have been pushing since it’s still going to go out at THIRTY PPS or higher, RIGHT?

    Well, I’ll save that buy decision for greater fools, or is it VILLAGE IDIOTS than me. imo

  • 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 impressive spectrum, as well as its existing 4G WiMax network, which Sprint will upgrade to 4G LTE next year.

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