The ongoing three-way merger dance between Softbank, Sprint Nextel and Clearwire continues to entertain as one part of the tango garnered an important government stamp of approval, while the other continued to urge for shareholder approval.
Sprint Nextel reported today that the Committee on Foreign Investment in the United States found “no unresolved national security issues” with Softbank’s proposed $20.1 billion acquisition of a 70% stake in the domestic carrier.
The CFIUS approval was garnered after both Sprint Nextel and Japan’s Softbank agreed to enter into a “National Security Agreement” with the U.S. government that reportedly involves the inclusion of a four-member national security committee to oversee network operations. This was done to alleviate concerns regarding the use of infrastructure equipment from Chinese vendors across Clearwire’s network that Sprint Nextel and Softbank said would be removed by 2016.
The U.S. government had previously pressured Sprint Nextel to bypass the use of network equipment from Chinese vendors Huawei and ZTE for its ongoing Network Vision program citing national security concerns.
Sprint Nextel and Softbank added that they expect their deal to close in July, with a shareholder vote on the proposal scheduled for June 12. One bump in that road continues to be the continued interest in Sprint Nextel from Dish Network, which has offered $25.5 billion for a 68% stake in Sprint Nextel. Sprint Nextel set up a “special committee” to investigate that proposal with the approval of Softbank. While that committee has yet to release its findings, Sprint Nextel’s board of directors has recommended that shareholders vote in favor of the Softbank offer.
Analysts note that the Softbank offer has the greatest chance of gaining eventual approval, though many expect the Japanese carrier will have to “sweeten” its offer to garner that final approval.
Meanwhile, Clearwire released a note today refuting the findings of an investor services agency that recommended Clearwire shareholders vote against Sprint Nextel’s proposed acquisition of Clearwire. Glass Lewis & Co. said it opposed the current deal due to Sprint Nextel’s influence over the review process of the proposal. Clearwire had set up a special committee to review potential acquisition proposals, though Sprint Nextel noted that it would not support another acquirer with its controlling stake in Clearwire.
In response, Clearwire refuted the Glass Lewis findings.
“With the vote for Clearwire’s proposed merger with Sprint just days away, the Clearwire board and special committee felt compelled to respond to Glass Lewis’ recent report, which Clearwire believes was
based on superficial analysis, contained numerous inaccuracies, and grossly underestimates the economic realities facing the company,” Clearwire noted in a statement. “The report also demonstrates a complete lack of understanding of Clearwire’s existing governance structure and erroneously assesses the value of the Company’s proposed transaction with Sprint.”
Sprint Nextel recently increased its offer to acquire the remaining stake in Clearwire from $2.97 per share to $3.40 per share just ahead of the initial shareholder vote on the transaction. A rescheduled vote on the enhanced offer is set for May 31.
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