Sprint complaints aside, Dish and Clearwire are ready to make a deal

Despite Sprint's continued protest against Dish's cash offer to acquire as much of Clearwire as possible at $4.40 per share, Clearwire looks to be nearing a decision to accept it. Sources familiar with the matter tell The Wall Street Journal that the special committee at Clearwire assigned with assessing the current offer from Dish will advise the rest of the company's board to push back a Thursday shareholder vote in order to accept Dish's cash offer for the company. Previous arguments from Sprint that the deal is not in the best interest of the company nor is it legally possible given the governance structure demands from Dish (which call for board member appointments as a term) still remain, adding to the confusion. Sprint claims that its previous agreements with Clearwire, and a restructuring of the company in 2008, conflict strongly with the demands Dish has on its offer.

Dish and Clearwire don't seem to be bothered by the potential structural issues of the deal, and have explained as such to Sprint previously. If Clearwire is to accept Dish's offer -- whether it be with revised governance terms or not -- it would have to be for at least 25-percent of the company to make any meaningful difference for Dish's plans to block Sprint's buyout of Clearwire. Sprint needs a majority of the minority shareholders to approve its plan to buyout the rest (49.5-percent) of the company it doesn't already own, something that simply won't happen if Dish controls that majority share.

Let's also remember that Dish and SoftBank are on their final round of offers to try and buy out Sprint in the coming weeks as well, which adds another angle to this whole discussion. Next week is shaping up to be a major decision week for these four companies, with lots of money getting ready to change hands if everything goes Sprint's way.

Source: WSJ


Reader comments

Clearwire expected to accept Dish offer amidst questions of governance terms


Dish is so desperate to merge with or buy someone because they're doing sooooo well with their current line of work. /s

The worst thing about Clearwire accepting this deal is that it will most likely kill the Sprint and Softbank deal seeing that a stipulation to the merger was that Sprint be able to aquire Clearwire. Cant wait to see how this one plays out.

Sprint acquiring Clearwire (which they will anyways in the end), is not a condition of SoftBank merger with Sprint. It was at one time, but was taken out awhile back.

The SoftBank deal with Sprint will be done before this whole Clearwire mess is sorted out.

The DISH / Clearwire deal is not going to fly. Sprint is the majority shareholder of Clear and will not let this happen. They sent Clearwire a letter to that effect, advicing them they had too much of their own spectrum assets invested in Clearwire from the merged Xohm 4G WiMAX venture and they were simply not going to let DISH come in and profit at their expense.

It won't happen since Sprint is the majority owner of Clearwire. It'll get veto by Sprint before the deal ever leave the ground.

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You have to look deeper into the subtleties of this deal. Sprint only owns 50.5% of Clearwire. In order to push its deal through to buy the other 49.5%, it needs half of those minority shareholders to agree to the deal. If Dish buys 25% of the company (greater than half of 49.5%), then it can block Sprint's attempted purchase of the rest of the company.

Sprint has no direct say into what the current minority shareholders want to do with their shares. If Dish can convince enough shareholders to sell to it so that it hits 25% ownership of Clearwire, it has accomplished what it wants.

You need to look even deeper than that. Sprint currently owns 54% of Clearwire, though only about 50.5% of the voting rights. However, as part of Clearwire taking Sprints money to stay alive, should Clearwire vote against the Sprint buyout, the debt will convert to stock. That, plus the shares from Intel, Comcast, and Bright House that have already agreed to sell to Sprint, and Sprint is going to end up with about 68% of Clearwire in the near future.

The restriction that Sprint needs approval of 50% of the minority shareholders is a part of the standstill agreement that expires in November. After that, being the majority shareholder and controlling the majority of the board, Sprint can simply change the Clearwire Bylaws to a simple majority vote. In the end, Sprint is going to own Clearwire, regardless of what Dish does, if it really wants it.

Dish has other motives I believe than wanting to own Clearwire. In the end, Dish may get some of Clearwire's EBS spectrum, or maybe even a hosting agreement with Sprint for their network, in exchange for them getting out of Sprint's way.

So this whole thing is a ploy to cut another deal with sprint, and then they'll bow out gracefully? What would they want as a conciliation prize from sprint? Some type of Spectrum block or licencing to use their towers for Dish's own network coverage?

Seems to be pretty much the only hand DISH has. They can't actually buyout all of Clearwire without Sprint's approval. From reading SEC filings DISH and Sprint would've had a network sharing agreement a while back, but DISH wanted unreasonable terms from Sprint. So ultimately a deal never came about.

Dish is messing everything up for sprint. Sprint combined with clearwire has the potential to be the best positioned wireless carrier. For years I have been thinking and saying the sprint should by out clearwire and take controlled of all that spectrum.

But the spectrum is not owned, it's leased from the FCC on our behalf, the United States citizens actually own the airwaves over the country. I would think if one company buy's out another the FCC would take back that licensing deal and then re-auction it off again. I know, that would actually be smart and practical which our government is not.

How about if Sprint, Clearwire, and Dish all combine into one company. Maybe they might have a chance to form one successful company.

As for Softbank, take a look at what foreign ownership has done to T-Mobile.

Sprint is already a successful company. But they want to grow more, which is certainly reasonable.

That is exactly what dish wants the end result to be, with Dish in control.

Sprint would certainly be better off with Softbank. Dish is a bit of a disaster. Let them cut their teeth with T-Mobile and T-Mo would be better off with them.

Verizon too came into existence from a bunch of smaller companies forming together, and now look at them. I too would like to see them all group together to form one giant company to apply pressure to ATT and Verizon's duopoly, and their shady agreement to basically cooperate with each other in prices, contracts, rules, fees, anything to screw customers out of more money without offering anything. Sick of carriers self appointing themselves all this power, needs to be heavier regulation on them

How about if Dish get Clearwire and Softbank get Sprint...That`s equal deal...As long they can`t reach a deal.

What I don't understand is what Dish thinks is going to happen here. Dish wants Sprint. Sprint doesn't want Dish to have them. Dish tries to buy a 25% stake in Clear. Dish gets the 25% stake in Clear. Sprint now can't buy the rest of Clear. Softbank buys 78% of Sprint. Softbank/Sprint own 50.5% of Clear, with a potential 68% of Clear in the near future. Dish still owns 25% of Clear.

At this point, what exactly does Dish think they can do with the portion of Clear they own? They will have paid a bunch of money for a stake in a company they can't do anything with.

The sprint softbank deal is dependant on Sprint getting a huge (all or 75%+) of clear wire. If dish gets enough of clearwire they can ruin the softbank deal and be free and clear to buy sprint since there would be no other takers.

The bottom line is that dish wants sprint. They have 2 ways to reach that goal. Gotta say it is a good power play on their part, and stupid of sprint to not buy clearwire outright awhile ago.

My numbers are more than likely off, but that is the gist of it.

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No the Softbank/Sprint deal is not conditioned on buying CLWR. They amended the merger agreement to remove that provision. Probably when they realized the CLWR vote wouldn't go their way. The Softbank/Sprint deal is pretty much done. The only thing left is for the FCC to give their blessing and the shareholder vote to take place. Sprint is probably just going let Dish buy it's minority stake and wait until later in the year when it can change CLWR's bylaws.

The only thing they can do is try to get Softbank/Sprint to agree to some type of network sharing deal. Dish needs a carrier with an existing network to host all this spectrum they've acquired. It would be too costly for them to try and build one out. Dish and Sprint tried to negotiate a deal prior to Softbank coming along, but Dish wanted terms that were Sprint considered unreasonable. This is all a leverage game Dish is trying to play. Ultimately it only delays Sprint or Softbank acquiring ClWR. With Sprint owning more than 2/3 of the outstanding stock, they'll be able to rewrite the CLWR bylaws later in the year to remove the minority shareholder restrictions.

Sprint should get together with softbank and maybe match or offer a slightly better offer. Offer them 4.75 per share, and be done with it. I know that it would take money away from the capital that Softbank is giving them when the deal close, but at least they would have the spectrum. Or if they march the deal, maybe clears shareholder would favor sprint then dish to acquire the shares, if not all, then hopefully most minority shareholders would or should vote for sprint.

I agree with you on this... what I want to know is where is this going to take Sprint service if Dish take it over? I mean will we have to have clunky satellite dishes on our houses to get Cell phone service?

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I have Sprint now. If Dish buys them, I am disconnecting my Sprint service. Dish is a horrible company. I can tell you horror stories about it. They have unfair and illegal labor practices.( I can provide an example of this) They pay the lowest in the industry. Nasty company. If any of you out there work for Clearwire now, and Dish buys it, jump ship and find a new job. If Dish uses this to tank the Softbank deal and end up buying Sprint, everyone with Sprint service, disconnect it. Anyone working for Sprint or Clear, find a new job. The FIRST thing they will do is fire everyone for "Performance" reasons. Then replace them with people making $1 more then minimum wage or just outsource you all.