After much speculation, Sprint Nextel officially put in a bid to acquire the remaining minority interest in Clearwire that it does not already own. The offer, priced at $2.90 per share, is valued at a total of $2.1 billion.
Analysts for the most part seemed to indicate that the offer was at the low end of expectations and likely just a starting point for negotiations.
Sprint Nextel is set to be infused with $20 billion from Japan’s Softbank, which is looking to acquire a 70% stake in the country’s No. 3 operator. When that deal was announced many cited the synergies possible through incorporating Softbank’s current work in deploying TDD-LTE services in the 2.5 GHz band with similar plans underway at Clearwire.
As part of its offer, analysts noted that Sprint Nextel has also agreed to provide interim financing to Clearwire to the tune of $800 million.
Analysts questioned the low-ball offer citing Clearwire’s portfolio of spectrum, which is of an average of 150 megahertz across the country. At a time when spectrum has become harder to come by and more in demand, Clearwire’s holdings would seem to be a boon for any operator. However, many have also noted that the spectrum’s position in the 2.5 GHz band makes it practical only for high-density, urban locations, diminishing the nationwide aspect of the holdings.
Clearwire’s stock was trading up more than 10% on the news at $3.10 per share, which is at a 52-week high. The company’s stock has been trading in the low- to mid-$2 range for more than a month prior to the most recent rumors and offer, and was even in the mid-$1 range as recent as early October. Much of that depression has been tied to concerns regarding the company’s plans to fund its rollout of TDD-LTE technology across its network in place of its currently deployed WiMAX service.
The carrier has also been treading water operationally, with its third quarter financial results showing a significant drop in wholesale customers on its network served through an arrangement with Sprint Nextel.
Clearwire acknowledged the offer, but so far is keeping tight-lipped on how it plans to proceed.
“Clearwire is currently in discussions with Sprint regarding a potential strategic transaction,” the company noted in a statement. “A special committee of the Clearwire board of directors, previously formed to review potential indications or proposals, including from Sprint, has been reviewing the potential strategic transaction. On [Dec. 12], Sprint submitted a non-binding proposal that had been reviewed by its board of directors, which included a purchase price for the remaining shares of class A common stock and class B common stock (and related Clearwire Communications L.L.C. units) of Clearwire it does not already own. Clearwire does not comment on ongoing negotiations with counterparties and, under the direction of the special committee, continues to be in discussions with Sprint to explore a transaction. There can be no assurance as to the terms of any potential transaction or that any transaction will result.”
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