Mergers & acquisitions

Clearwire Board Says Sprint's the Only Way Out

Clearwire LLC mailed a letter to its stockholders Monday, urging them to accept Sprint Nextel Corp.'s proposed acquisition and making the case that the 4G wholesaler has few other viable options. Clearwire's board of directors wrote in the note that they have considered all strategic options, with help from independent financial and legal advisers, and are unanimously recommending that shareholders go with Sprint's $2.2 billion offer. The letter did not, however, acknowledge Dish Network Corp.'s rival bid, which comes in higher at $3.30 per share, compared to Sprint's adjusted $2.97 per share. (See Clearwire Inching Towards Sprint Deal.) "On the unanimous recommendation of the Special Committee, the Clearwire board has unanimously concluded that the proposed transaction with Sprint is the best strategic alternative for stockholders, representing fair, attractive and certain value, especially in light of the Company's limited alternatives and the well-known constraints of its liquidity position," the letter reads. So, what other options does the cash-strapped company have? Not too many, reading between the lines of the shareholder letter. Without Sprint, Clearwire's chances of securing the $2 billion to $4 billion it needs to continue operations and roll out LTE are highly uncertain, the board argues. The company was in discussions with more than 100 targets but failed to secure an additional major wholesale customer, according to the letter. If it can't secure other wholesale customers, Clearwire said its options include monetizing its excess spectrum, something it hasn't yet been successful at; finding alternative financing, which Clearwire's board thinks would have costly, unattractive terms; seeking out another partner, which Sprint's ownership would likely block; or going into bankruptcy, which would ultimately hurt shareholders. Clearwire's stockholders will vote on the transaction on May 21. In the meantime, Sprint is tied up in merger drama of its own, with Dish and Softbank. Dish made its acquisition bid official Monday under the Hart-Scott-Rodino Antitrust Act, while the Softbank acquisition soldiers on through regulatory approvals. (See Softbank, Dish, Sprint Go Off to the Races.) — Sarah Reedy, Senior Editor, Light Reading
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