Clearwire (CLWR) Slammed as Sprint (S) Bid Not Coming Anytime Soon
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Shares of Clearwire (Nasdaq: CLWR) are getting hit early Tuesday morning following a near-16 percent rise on Monday, as reports speculate that Sprint might actually not make a bid for the company after all.
According to Bloomberg, citing details of Sprint's (NYSE: S) merger agreement with SoftBank, the deal will close in six to eight months with the two companies restricted from engaging in any extraordinary M&A activity until then.
One analyst noted that Sprint doesn't need to acquire Clearwire given: a) Clearwire is now too expensive, and b) Sprint already has a lease on Clearwire's spectrum through 2013. He thinks Sprint might be better off simply buying about 700-megahertz of spectrum.
Within the deal, Sprint will get an $8 billion infusion from SoftBank, which it could use for network improvement, to strike better smartphone deals, or more acquisition activity in the future. Speculation surrounded whether or not Sprint will make a bid for the rest of Clearwire it doesn't own. With Clearwire's market cap at about $4 billion following the strong move yesterday, Sprint would have plenty of cash to make a deal.
However, nothing would be able to come to fruition until next year at the earliest, when the deal closes. At that point, Bloomberg notes, Sprint might look at Clearwire again.
Investors might also want to note that Sprint has about $4 billion in debt coming due in 2013, which may sap a good portion of the infused funds from SoftBank.
Shares of Clearwire are indicated nearly 16 percent lower Tuesday, while Sprint is higher early.
According to Bloomberg, citing details of Sprint's (NYSE: S) merger agreement with SoftBank, the deal will close in six to eight months with the two companies restricted from engaging in any extraordinary M&A activity until then.
One analyst noted that Sprint doesn't need to acquire Clearwire given: a) Clearwire is now too expensive, and b) Sprint already has a lease on Clearwire's spectrum through 2013. He thinks Sprint might be better off simply buying about 700-megahertz of spectrum.
Within the deal, Sprint will get an $8 billion infusion from SoftBank, which it could use for network improvement, to strike better smartphone deals, or more acquisition activity in the future. Speculation surrounded whether or not Sprint will make a bid for the rest of Clearwire it doesn't own. With Clearwire's market cap at about $4 billion following the strong move yesterday, Sprint would have plenty of cash to make a deal.
However, nothing would be able to come to fruition until next year at the earliest, when the deal closes. At that point, Bloomberg notes, Sprint might look at Clearwire again.
Investors might also want to note that Sprint has about $4 billion in debt coming due in 2013, which may sap a good portion of the infused funds from SoftBank.
Shares of Clearwire are indicated nearly 16 percent lower Tuesday, while Sprint is higher early.
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