Clearwire board approves improved Sprint offer

Clearwire board approves improved Sprint offer

Sprint is set to acquire full ownership of wholesale data provider Clearwire after upping its bid to acquire the 49% stake in the company it does not own from $2.90 per share to $2.97 per share.

The deal represents a 128% premium on Clearwire’s closing share price before discussions were confirmed and totals $2.2 billion.

This values Clearwire at approximately $10 billion, including net debt and spectrum lease obligations, according to Sprint.

Some Clearwire shareholders had said that the previous offer undervalued the company and the extra seven cents per share may not be enough to alter this perception.

Sprint said that Clearwire would enhance its spectrum holdings, strengthen its position and increase competitiveness in the US wireless industry.

The deal has received support from the Clearwire board and Softbank, which is in the process of acquiring a 70% stake in Sprint for $20.1 billion.

“Sprint is uniquely positioned to maximise the value of Clearwire’s spectrum and efficiently deploy it to increase Sprint’s network capacity. We believe this transaction, particularly when leveraged with our Softbank relationship, is further validation of our strategy and allows Sprint to control its network destiny,” said Dan Hesse, CEO of Sprint.

Clearwire boasts 2.5GHz spectrum assets that will enable Sprint to enhance its LTE network roll-out as it plays catch up with the country’s top two mobile operators AT&T and Verizon.

Sprint and Clearwire have also entered into agreement to provide $800 million of additional financing for Clearwire notes which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share.

Sprint has agreed to acquire $80 million of exchangeable notes per month for up to 10 months beginning in January 2013.

The transaction is subject to regulatory and closing conditions, as well as approval from Clearwire’s shareholders. In addition it is also dependent on the completion of Softbank’s transaction with Sprint.

Comcast, Intel and Bright House Networks, which own 13% of Clearwire’s voting shares, have said they will vote in favour of the transaction.

The Clearwire and Softbank deals are expected to close in mid-2013.

Citigroup acted as financial advisor to Sprint and Skadden, Arps, Slate, Meagher & Flom LLP and King & Spalding LLP acted as counsel to the company. The Raine Group acted as financial advisor to Softbank and Morrison Foerster LLP acted as counsel to Softbank. Evercore Partners acted as financial advisor and Kirkland & Ellis LLP acted as counsel to Clearwire.

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