Clearwire Corp. (CLWR)’s board recommended Sprint Nextel Corp. (S)’s new takeover bid of $3.40 a share, or about $2.5 billion, saying it’s the best offer available to the struggling wireless-service provider.
The increased price, which Sprint boosted from $2.97 a share yesterday, tops a $3.30 bid from Dish Network Corp. (DISH) After the terms were changed, Clearwire rescheduled yesterday’s meeting for investors to vote on the deal until May 31. The new offer values all of Clearwire, including debt and Sprint’s current equity in the business, at $10.7 billion.
“The revised offer, when compared with other potential transactions reasonably available to the company at this time, is the most favorable potential transaction to the company’s unaffiliated stockholders,” Bellevue, Washington-based Clearwire said in a statement. “The terms of the revised offer are advisable, fair to and in the best interest of such stockholders.”
While the board had also endorsed the lower bid, Sprint faced opposition from Clearwire’s shareholders, who said it undervalued the company. Sprint, which already owns slightly more than 50 percent of the business, is trying to buy the rest of the shares to gain control over Clearwire’s valuable spectrum -- something it needs to bolster its own network.
Clearwire fell 0.6 percent to $3.38 at the close in New York. The stock has gained 17 percent this year.
Clearwire has said it faces a cash crunch and needs at least $1.7 billion to keep operating, adding urgency to complete a deal.
Crest Financial Ltd., one of the biggest opponents to the Sprint takeover, said yesterday that the new terms weren’t satisfactory. The Houston-based investment firm urged Clearwire’s board to reject the bid, arguing it should have a separate, competitive process to seek proposals.
Mount Kellett Capital Management LP, another Clearwire investor, forged an alliance with other shareholders earlier this month to coax Sprint into making a better offer. The group, which also includes Highside Capital Management LP, Glenview Capital Management LLC and Chesapeake Partners Management Co., remains opposed to the Sprint bid, according to a filing today. It accounts for more than 18 percent of Clearwire’s publicly traded shares.
Sprint’s failure to sway the Mount Kellett-led group could be an obstacle to the deal, said Kevin Roe, an analyst at Roe Equity Research in Dorset, Vermont.
“The opposing group stayed together,” Roe said. “They are the enabling block.”
Evercore Partners served as Clearwire’s financial adviser, while Kirkland & Ellis LLP was legal counsel. The board’s special committee evaluating the offer consulted with Centerview Partners, Simpson Thacher & Bartlett LLP and Richards, Layton & Finger.
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