Dish's Offer For Clearwire Reveals Ulterior Motives in High Stakes Game of Chess (DISH) (CLWR) (S)
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Up: 8 | Down: 5 | New: 26
Rating Summary:
10 Buy, 20 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Now that some of the smoke has clear around Dish Network Corp.'s (Nasdaq: DISH) bid for Clearwire (Nasdaq: CLWR), Dish's ulterior motive are becoming increasingly clear. As those following the developments know, at $3.30 Dish's offer for Clearwire is above Sprint's (NYSE: S) offer to acquire a 50 percent stake at a price of $2.97. It also complicates Sprint's pending Softbank deal.
While many believe Dish does in fact want some of Clearwire's assets, its offer is not viewed as 'real' and appears to be more of spoiler bid. This has many on Wall Street speculating about Dish's true motives.
Brean Capital analysts described the deal as follows:
"It is hard to be sure what DISH is up to in its bid for Clearwire. On the one hand, we think it is financially feasible, would provide and enable DISH's wireless aspirations with valuable and useful spectrum and a LTE network that is largely built out. On the other hand, given DISH's recent conflict with Sprint, which owns 50% of Clearwire, and which has offered to buy the remaining 50%, over spectrum allocation at the FCC, it could merely be an effort to drive the price of Clearwire for Sprint up. Somewhere in between, DISH could be seeking leverage to gain a partnership with Sprint and/ or Clearwire for DISH's own wireless ambitions. If nothing else, we believe DISH's bid for Clearwire shows disruption to come from DISH's entrée into wireless."
Interestingly, the Dish offer follows an early announcement that it would not sell its spectrum and would instead move forward with its plans to develop a wireless service extension to the DISH Network. In order to do this, it will need an LTE network, possibly Sprint's.
Another possibility is that Dish is simply trying to be disruptive.
Deutsche Bank's Doug Mitchelson made the following comments concerning Dish's offer:
"DISH has included numerous conditions as part of its indication of interest, some of which Clearwire noted 'may not be permitted under the terms of Clearwire's legal and contractual obligations’. We would expect DISH management is well aware of Clearwire's legal and contractual obligations given the prior conversations it had with Clearwire regarding purchasing spectrum, and this may suggest that DISH is not that serious about its preliminary indication of interest to buy the entire company, since the conditions DISH has attached will likely be unable to be met. Further, the fact that DISH did not previously make an offer to buy the company, but rather just pursued the acquisition of Clearwire spectrum, suggests to us that DISH's true goal may be to convince Clearwire by being disruptive to sell DISH spectrum to continue enhancing DISH’s wireless spectrum portfolio at low prices."
In either case, it is clear that DISH Founder and Chairman Charlie Ergen is ready to play hardball. Consider the high stakes involved, others are likely just as prepared. Game on.
While many believe Dish does in fact want some of Clearwire's assets, its offer is not viewed as 'real' and appears to be more of spoiler bid. This has many on Wall Street speculating about Dish's true motives.
Brean Capital analysts described the deal as follows:
"It is hard to be sure what DISH is up to in its bid for Clearwire. On the one hand, we think it is financially feasible, would provide and enable DISH's wireless aspirations with valuable and useful spectrum and a LTE network that is largely built out. On the other hand, given DISH's recent conflict with Sprint, which owns 50% of Clearwire, and which has offered to buy the remaining 50%, over spectrum allocation at the FCC, it could merely be an effort to drive the price of Clearwire for Sprint up. Somewhere in between, DISH could be seeking leverage to gain a partnership with Sprint and/ or Clearwire for DISH's own wireless ambitions. If nothing else, we believe DISH's bid for Clearwire shows disruption to come from DISH's entrée into wireless."
Interestingly, the Dish offer follows an early announcement that it would not sell its spectrum and would instead move forward with its plans to develop a wireless service extension to the DISH Network. In order to do this, it will need an LTE network, possibly Sprint's.
Another possibility is that Dish is simply trying to be disruptive.
Deutsche Bank's Doug Mitchelson made the following comments concerning Dish's offer:
"DISH has included numerous conditions as part of its indication of interest, some of which Clearwire noted 'may not be permitted under the terms of Clearwire's legal and contractual obligations’. We would expect DISH management is well aware of Clearwire's legal and contractual obligations given the prior conversations it had with Clearwire regarding purchasing spectrum, and this may suggest that DISH is not that serious about its preliminary indication of interest to buy the entire company, since the conditions DISH has attached will likely be unable to be met. Further, the fact that DISH did not previously make an offer to buy the company, but rather just pursued the acquisition of Clearwire spectrum, suggests to us that DISH's true goal may be to convince Clearwire by being disruptive to sell DISH spectrum to continue enhancing DISH’s wireless spectrum portfolio at low prices."
In either case, it is clear that DISH Founder and Chairman Charlie Ergen is ready to play hardball. Consider the high stakes involved, others are likely just as prepared. Game on.
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