Sprint Chills to DISH, Sues Over Clearwire Offer
June 18, 2013 10:20 AM
DISH's effort to gain leverage on Sprint in acquisition bid may have backfired
Charlie Ergen, DISH Network Corp. (
) CEO, has met with silence a demand by Sprint Nextel Corp. (
) to sweeten his $25.5B* USD bid for majority ownership of the U.S. carrier. Sprint had given Mr. Ergen until June 18 to respond, calling his previous bid "not actionable".
*(based on current share prices)
I. DISH Scores Board Endorsement of Clearwire Offer, Gains Leverage
DISH is offering $17.3B USD in cash, plus $8.2B USD in stock for a 68 percent stake in Sprint. However, Softbank Corp. (
) -- who bid first -- raised its own offer to $21.6B USD, including $16.6B USD in cash, for a 78 percent stake in Sprint. While the DISH offer looks more attractive, analysts (and Sprint's management) seem to believe Softbank offers slightly better value due to its deep experience as an active wireless carrier.
Mr. Ergen, who owns large amounts of spectrum and has long been rumored to be considering the launch of a fifth major carrier in the U.S., while refusing to up his bid did make an aggressive move. He raised his bid for Clearwire Corp. (
), the wireless broadband firm who sells service to Sprint.
DISH's offer for Clearwire won board approval last week. [Image Source: TNW]
DISH and Sprint have been
locked in a bidding war
, but DISH's bid has been largely considered unlikely to pass due to onerous debt/equity swap conditions and commercial agreements. As of Feb. 2013 Sprint was
offering $2.97 USD/share for Clearwire
, while DISH was offering $3.30 USD/share.
Sprint already owns a 50 percent stake in Clearwire.
Since DISH has
its offer by a third to $4.40 USD/share, while Sprint has bumped its offer only 14 percent to $3.40 USD/share. As DISH has sweetened its bid, investors are starting to take the offer seriously. Last week Clearwire's board urged shareholders to accept the offer, which will soon be put to a vote.
II. Sprint Fires Back With Lawsuit
Sprint responded this week by filing
Delaware Court of Chancery
. Sprint claims the DISH bid is illegal as it violates Clearwire's Equity Holders Agreement (EHA), which requires tender offers to be approved by 75 percent of shareholders. As Sprint, who has "invested billions" in Clearwire, controls half the company, that's not going to happen.
Further, the lawsuit is based on part of DISH's terms, which would place a number of DISH designees on the company's board. The EHA states that Sprint gets to nominate 7 board members, the Significant Investors Group gets to nominate 4, and the remaining 2 board members.
Sprint contends DISH's offer violates company terms. [Image Source: Scott Lippincott]
Sprint's board members were not allowed to vote on the recommendation regarding the DISH offer, which
The company's terms references in its legal complaint trace back to its bailout of Clearwire back in 2008. At the time investors took on the arguably favorable terms, in exchange for a
$3.2B USD investment from Sprint
which arguably saved the struggling entity. Now those terms have come back to haunt shareholders who want to cash out via DISH's offer.
Billionaire John Paulson, whose hedge fund Paulson & Comp., Inc. is the second largest owner of Sprint stock, appears to be growing tired of DISH's antics. He has formally announced he will back Softbank's proposal.
Charlie Ergen (Dish/Echostar) and Masayoshi Son (Softbank) both serve as joint chairman and CEOs of their firms. Both have a penchant for driving a hard deal. And both hate to lose.
[Image Source: Sawyer Speaks (left); Bloomberg (right)]
If Softbank wins, it would be the largest acquisition of an American company by a Japanese investor to date.
"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
Sprint Closes on Acquisition of Clearwire With $80M USD Loan
February 27, 2013, 4:47 PM
Sprint Announces Clearwire Buyout at $2.97/Share
December 17, 2012, 9:00 AM
Sources Claim Sprint, Clearwire Are Close to a Buyout Deal
December 12, 2012, 8:30 AM
Sprint Brands WiMAX as XOHM, Plans to Invest $5B in Technology
August 17, 2007, 9:05 AM
Best Secure Android Mobile Browsers:
December 5, 2016, 7:24 PM
Latest News, this is how the Moto X (2017) might look
December 3, 2016, 9:02 AM
Fake Apple Chargers Fail Safety Tests
December 2, 2016, 5:00 AM
FlowMotion veils its new smartphone stabilizer, FlowMotion One
December 1, 2016, 3:00 AM
Samsung Galaxy C7 Pro smartphone surfaces online.
November 30, 2016, 1:00 AM
Best Phones of 2016 - Priced under $650.00
November 27, 2016, 5:00 AM
Most Popular Articles
What Can You Do with Your New Echo Dot?
December 3, 2016, 5:00 AM
Sales Battle - Apple iPad Mini vs Samsung Galaxy Tab
November 29, 2016, 12:36 AM
Google Wi-Fi – A Scalable Wi-Fi Solution for any size Home or Apartment
November 30, 2016, 1:00 AM
PIQ ROBOTTM reveals its new artificial intelligence software
November 29, 2016, 12:59 AM
PlayStation 4 Pro – 4K Console for 4K TVs
November 28, 2016, 1:00 AM
Latest Blog Posts
e Guide: Mobile Security for 2017
Dec 6, 2016, 5:00 AM
Apple Car is Not Dead
Dec 5, 2016, 1:00 AM
Dec 4, 2016, 5:00 AM
Dec 3, 2016, 5:00 AM
Dec 2, 2016, 5:00 AM
Surface Ergonomic Keyboard
Dec 1, 2016, 3:01 AM
Chapeconense plane crash: Football rallies around Brazilian Team
Nov 30, 2016, 1:00 AM
How to Extends Your iPhone’s Battery Life
Nov 29, 2016, 12:49 AM
Nov 28, 2016, 1:12 AM
News: Fidel Castro
Nov 27, 2016, 5:00 AM
Nov 26, 2016, 5:00 AM
Changes in Social status affect the way genes turn on and off within immune cells.
Nov 25, 2016, 5:12 AM
Austrian far–right hopeful Hofer may back EU vote.
Nov 24, 2016, 4:00 AM
Final Fantasy XV Leaked Before Nov 29 Launch Date
Nov 23, 2016, 1:00 AM
Nov 22, 2016, 2:26 AM
Nov 21, 2016, 1:00 AM
HTC Makes Big Moves in China
Nov 20, 2016, 2:00 AM
Do you know who is the number one company in the word?
Nov 19, 2016, 5:30 AM
Foldable Cardboard ”EcoHelmet” wins James Dyson Award’s Top Prize
Nov 18, 2016, 2:39 AM
Scientists Discover Roundest Object Ever Spotted in Universe
Nov 17, 2016, 1:00 AM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information