DISH's Fantasy Offer for Clearwire May Cost Sprint Some Real Cash (CLWR) (S) (DISH)

January 9, 2013 7:37 AM EST
In response to the DISH (Nasdaq: DISH) $3.30 per share proposal, Clearwire (Nasdaq: CLWR) received a letter from its largest shareholder Sprint (Nasdaq: S) stating, among other things, that Sprint has reviewed the DISH Proposal and believes that it is illusory, inferior to the Sprint transaction and not viable because it cannot be implemented in light of Clearwire's current legal and contractual obligations. Sprint has stated that the Sprint Agreement would prohibit Clearwire from entering into agreements for much of the DISH Proposal.

The following are excerpts from Sprint's response to the Dish Offer:

"In contrast, the DISH proposal includes a series of interdependent commercial agreements, debt and equity purchases and spectrum sales, which together with the other conditions required by DISH to complete the transaction, makes the proposal not viable."

"In addition, the DISH proposal would require Sprint to voluntarily waive rights that it holds as a stockholder of Clearwire and that it possesses through various vendor and customer contracts that significantly predate Sprint's proposed acquisition of the remainder of Clearwire. Sprint does not intend to waive any of its rights and looks forward to closing the transaction with Clearwire and helping consumers across the country realize the benefits of this combination."

While the offer may in fact be fantasy, it will likely cost Sprint some real cash. With Sprint's own pending takeover by Softbank, Clearwire is an important cog and the Dish bid has put Clearwire shareholders in the catbird seat. Speculators have bid the stock over 7 percent above Sprint $2.97 per share offer on anticipation of a higher bid.

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