Sprint's (S) Bid for Clearwire (CLWR) Undervalues Key Spectrum Assets - Analyst
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Price: $4.99 --0%
Rating Summary:
2 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
2 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Clearwire (Nasdaq: CLWR) is moving above Sprint's (NYSE: S) bid today as investors hope another bidder comes in over the top for the company.
Earlier, Sprint offered to purchase the remaining amount of stock in Clearwire is doesn't own -- about 47 percent -- for $2.90 per share. In addition, Sprint offered interim financing in the interim (to closing) of about $800 million, which would be paid monthly. Financing would be made possible via Sprint buying exchangeable notes from Clearwire Communications and Clearwire Finance, with the notes exchangeable to Class B shares.
Wells Fargo noted this morning that they see Clearwire shareholders rejecting such a price. Wells commented, "To put this in perspective, at $2.90 / share, CLWR is valued at $0.17 / MHz / POP. While we recognize the fact that Sprint is the logical buyer of this asset, we note that other transactions (even spectrum bought out of bankruptcy by other players) has gone at a 50%+ premium to this implied value."
The firm noted that at least two lawsuits have been filed since chatter heated up, both alleging breach of fiduciary duty. Wells thinks that both Sprint and Clearwire take the suits seriously and also understand the value of the spectrum in play.
But, you have to start somewhere. Despite Wells expecting things to get messy, the firm notes that it's hard to imagine Sprint utilizing a strategy moving forward that doesn't include Clearwire.
Wells rates Clearwire at Outperform with a valuation range of $3.50 to $4 per share. Shares of Clearwire are 11.3 percent higher early.
For an analyst ratings summary and ratings history on Clearwire click here. For more ratings news on Clearwire click here.
Shares of Clearwire closed at $2.75 yesterday.
Earlier, Sprint offered to purchase the remaining amount of stock in Clearwire is doesn't own -- about 47 percent -- for $2.90 per share. In addition, Sprint offered interim financing in the interim (to closing) of about $800 million, which would be paid monthly. Financing would be made possible via Sprint buying exchangeable notes from Clearwire Communications and Clearwire Finance, with the notes exchangeable to Class B shares.
Wells Fargo noted this morning that they see Clearwire shareholders rejecting such a price. Wells commented, "To put this in perspective, at $2.90 / share, CLWR is valued at $0.17 / MHz / POP. While we recognize the fact that Sprint is the logical buyer of this asset, we note that other transactions (even spectrum bought out of bankruptcy by other players) has gone at a 50%+ premium to this implied value."
The firm noted that at least two lawsuits have been filed since chatter heated up, both alleging breach of fiduciary duty. Wells thinks that both Sprint and Clearwire take the suits seriously and also understand the value of the spectrum in play.
But, you have to start somewhere. Despite Wells expecting things to get messy, the firm notes that it's hard to imagine Sprint utilizing a strategy moving forward that doesn't include Clearwire.
Wells rates Clearwire at Outperform with a valuation range of $3.50 to $4 per share. Shares of Clearwire are 11.3 percent higher early.
For an analyst ratings summary and ratings history on Clearwire click here. For more ratings news on Clearwire click here.
Shares of Clearwire closed at $2.75 yesterday.
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