Softbank Chief Puts Tight Limit on Sprint's (S) Bid for Clearwire (CLWR)

December 14, 2012 6:38 AM EST Send to a Friend
Clearwire (Nasdaq: CLWR) holders may be in trouble.

According to reports out Friday, Softbank founder Masayoshi Son has said he would not back a deal for Sprint (NYSE: S) to buy Clearwire if the price exceeds $2.97 per share.

On Thursday, Sprint bid $2.90 for the remaining shares of Clearwire it didn't already own. The amount, plus commitment for $800 million in interim financing, valued the deal at about $2.1 billion. Sprint currently holds at 50.45 percent position in Cleariwre.

Several analysts came out with comments that, while nice, Clearwire investors are likely to want more out of the deal. Some said a bid of $5 per share would be more reasonable.

The price that Masayoshi Son represents the same amount that Sprint paid to acquire a stake from Eagle River Holdings, the fund set up by Clearwire founder Craig McCaw.

Minority holders in Clearwire include Intel Corp. (Nasdaq: INTC) and Comcast Corp (Nasdaq: CMCSA), which hold an aggregate 12.4 percent. Intel was said to be evaluating the offer while Comcast didn't comment on the issue.

While seeming like a generous offer given Clearwire's propensity to trade at or below $2 recently, the stock once boasted a price above $5, even topping $8.50 at once point. That's before competition heightened, including a recent push from DISH Networks (Nasdaq: DISH), a provider of satellite TV content, to move into the wireless market.

Sprint and Softbank entered a deal in October for Softbank to gain a 70 percent stake in Sprint for just over $20 billion.

Shares of Clearwire are down in early trading Friday. Shares closed up 15 percent to $3.16 on Thursday, meaning potential downside of 6 percent today if the $2.97 per share cap holds true.


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