By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Bellevue, Wash. — Sprint’s plan to buy the Clearwire shares that it doesn’t own has been thrown into disarray.
The board of wireless-carrier Clearwire reversed course last night and recommended that shareholders vote down Sprint’s acquisition plan and opt instead for a competing bid from Dish Networks. The board postponed today’s shareholder vote on the Sprint proposal and selected June 24 for a new vote.
Sprint said it “is evaluating” the Clearwire board’s statement “and will review any corresponding filings before determining its next steps.”
Because of Sprint’s ownership of more than 50 percent of Clearwire stock, Dish’s bid would give the satellite broadcaster only a minority share of Clearwire. Dish is seeking a minimum of 25 percent of Clearwire, governance rights and some board seats.
Dish is seeking access to Clearwire’s spectrum and expertise in helping it build its own wireless voice and data network to diversify beyond the mature satellite-TV business. Dish is also competing with Japanese carrier SoftBank to buy Sprint outright.
Sprint, though it owns almost 51 percent of Clearwire, doesn’t control the Clearwire board and wants full control of the cash-strapped money-losing carrier so it can use Clearwire’s spectrum to expand the capacity of its LTE network.
Sprint contended Dish’s bid is “not actionable” because Clearwire has predicated its bid on obtaining governance rights that Sprint said can’t be handed over because of Clearwire’s governance structure and the laws of Delaware, where Clearwire is incorporated. That structure was put in place in an equity holders’ agreement in 2008 when Clearwire restructured, Sprint said.
Specifically, Sprint said several rights demanded by Dish, including a contractual agreement to designate at least three Clearwire board members and the right to veto certain Clearwire actions, violate the equity holders’ agreement or Delaware law. Sprint said it will not waive any of its rights under the equity holders’ agreement.
The Clearwire board changed course and voted for the Dish proposal based on what it called the “unanimous recommendation” of a special committee consisting of independent, non-Sprint-affiliated directors.
The board recommended that stockholders accept Dish Network’s cash tender offer to acquire all outstanding common shares of Clearwire at $4.40 per share. The Dish tender offer is now set to expire at the end of July 2.
Clearwire had originally agreed to Sprint’s initial bid last December of $2.97 a share. Dish followed with a higher bid a month later at $3.30 per share. Then Sprint raised its offer in May to $3.40, and Dish upped its bid to $4.40.
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