Looking to regain the upper hand in negotiations, Sprint Nextel today sent a letter to Clearwire’s board of directors noting that Dish Network’s recent bid to acquire Clearwire was “not actionable,” citing “certain provisions violate Delaware law, Clearwire’s certificate of incorporation or the rights of the parties to the existing Clearwire Equityholders’ Agreement, including Sprint.”
The letter, which was addressed to Clearwire Chairman John Stanton; Dennis Hersch, chairman of Clearwire’s special committee of board of directors; and CEO Erik Prusch and signed by Sprint Nextel CEO Dan Hesse, comes just days after Dish Network put in a bid to acquire all or a portion of Clearwire for $4.40 per share, an increase over the pending $3.40 per share offer on the table from Sprint Nextel. That Dish proposal forced the delay of a Clearwire shareholder vote on the Sprint Nextel that was originally scheduled for May 31 to June 13. Sprint Nextel currently holds a controlling stake in Clearwire.
RCR Wireless News Editor-In-Chief Dan Meyer and Roger Entner, founder and lead analyst at Recon Analytics, discuss the ongoing Clearwire/Sprint Nextel/Softbank/Dish saga:
“Having invested billions of dollars in Clearwire, Sprint intends to enforce its legal and contractual rights, which are fundamental to investments it made,” the company noted in a statement.
In the letter, Sprint Nextel cited a handful of reasons as to why the Dish offer is not a “viable alternative,” including:
–Dish Network’s proposed board nomination process violates the Delaware law and the EHA.
–Dish Network’s proposed rights to veto certain actions violate Delaware law.
–Sprint Nextel does not plan on giving up governance rights.
–Dish Network’s proposed preemptive rights violate Delaware law and the Clearwire charter.
–Dish Network’s financing proposal requires Sprint Nextel and other EHA parties’ consent.
–The Dish Network proposal is a change in control that requires approval of 75% of Clearwire shareholders and the consent from Comcast, which has aligned itself with the Sprint Nextel proposal.
That last point was highlighted by analysts that doubted Comcast would allow a pay-TV rival to garner a controlling stake in Clearwire. The EHA terms were part of the original formation of the current Clearwire, which was announced in early 2008.
“Sprint remains committed to the transactions contemplated by our merger agreement and looks forward to consummating a merger with Clearwire in accordance with the terms previously recommended by the special committee and approved by the Clearwire board,” the letter concludes. “In light of the existing situation and the nature of this letter, we will be making appropriate filings containing a copy of this letter. We appreciate your consideration.”
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