Sprint claims accepting Dish's terms would violate Clearwire's equity holder agreement
As we would all expect, Sprint has publicly voiced its opposition to Dish's attempted purchase of Clearwire -- citing a whole host of reasons why the deal should not and will not go through as long as it is involved. Following the announcement by Dish late last week that it had offered a $4.40 per share -- a full $1 more than Sprint -- to acquire 100-percent of Clearwire, it's a natural progression that Sprint will oppose the deal. Sprint's first defense against the deal is sheer numbers -- it currently owns a majority share of Clearwire. This means that the deal to sell the entire company to Dish effectively cannot go through without Sprint's approval, which it of course has no intention of doing. Barring some crazy turn of events, Dish's ability to purchase the whole of Clearwire is off the table as long as Sprint is involved, so the next step is to keep the minority shareholders from wanting to sell even a portion of the company to Dish.
Sprint thinks that it has a solution to this problem as well, citing that Dish's demands related to its buyout attempt would violate Clearwire's equity holder agreement, as well as Delaware law. Specifically referencing Dish's request for a minimum of three board of director appointments, Sprint claims that the demands are outside of the realm of possibility for the deal. In it's letter to Clearwire, Sprint made this statement:
"Many Clearwire stockholders appear to be under the mistaken belief that Dish's proposal is a viable alternative to the Sprint merger agreement, and this is simply not the case."
Sprint is banking (literally, in fact) on a revised June 13th Clearwire shareholder vote to determine if it will accept Sprint's offer to buy the other 49-percent of the company at $3.40 per share. The Now Network will need approval from at least half of the minority shareholders in order to get its deal through, but it is facing strong opposition from several big players that hold nearly 25-percent of the minority shares. These opponents see the Dish deal as a clear (pardon the pun) victory for the Clearwire shareholders given the 29-percent boost in price over Sprint's offering.
We don't see this ending simply. Remember, it's all just a big game of poker.