Sprint’s attempted purchase of Clearwire may have hit a snag, according to a new report from Reuters. Sprint reportedly has a hard cap on how much it can offer to buy out the beleaguered Clearwire, set by SoftBank, which is purchasing a majority stake in Sprint for around $20 billion. Clearwire shareholders, however, reportedly think the offer price on the table isn’t high enough, and the rising stock price of Clearwire shares in the wake of news of the deal is providing them with ammunition.
The cap SoftBank is said to have put on an offer is $2.97 per share, which is only 7 cents higher than the $2.90 Sprint has already put on the table according to regulatory filings. Clearwire investors told Reuters that it just wasn’t enough, with many of them looking for a per share price of at least $5 or more. Reuters’ sources said that Sprint has timed this deal to try to take advantage of Clearwire’s current weak financial position, but they also claim Clearwire has alternative options in the works, though no specifics were given about what those would entail.
Obviously, Clearwire shareholders will be looking to secure as high a price as they possibly can, but an analyst from Pacific Crest said he still believes Sprint shouldn’t spend more than $3 per share, given the current state of Clearwire, though he does still believe it’s possible the deal could go as high as $3.50 per share. Sprint is also still reportedly talking to Intel and Comcast about buying out the 12.4 percent of shares those two companies own also, which could help strengthen their position against hold-outs.
While the deal looks to be in trouble, this is likely just the next step in negotiations between the two companies. In the end, both would definitely reap benefits from an acquisition going through, with Clearwire escaping a situation of poor liquidity and Sprint adding to its own network capabilities. It’s no surprise they disagree on the right price to make that happen, but we’ll see how inflexible either of these positions really are.
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two wireless networks serving almost 49 million customers at the end of the second quarter of 2009; industry-leading mobile data services; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone.
Clearwire, founded in October 2003 by telecom pioneer Craig O. McCaw, is a provider of simple, fast, portable and reliable wireless high-speed Internet service. Clearwire customers connect to the Internet using licensed spectrum, thus eliminating the confines of traditional cable or phone lines. Headquartered in Kirkland, Wash., the company launched its first market in August 2004 and now offers service in 50 markets across the U.S. as well as in Europe.
SoftBank is a Japanese telecommunications and media corporation, headquartered in Tokyo and founded in 1981 by Masayoshi Son. With a market capitalization of around $20 billion, SoftBank is one of the biggest Internet-related companies in Asia. SoftBank operates in various fields such as broadband infrastructure, e-commerce, Internet services, fixed-line telecommunications, mobile phone and web business, financial services and many more. The company took over mobile phone operations from Vodafone Japan in 2006 and is currently No. 3 among the main...