SALON

Monday, Dec 17, 2012 11:15 PM UTC

Sprint raises offer, to buy Clearwire for $2.2B

By

Topics: From the Wires,

NEW YORK (AP) — Sprint, the country’s third-largest cellphone company, said Monday that it will buy out the portion of wireless network operator Clearwire that it doesn’t already own after raising its offer price to $2.2 billion.

The deal would give Sprint control of a flailing affiliate, one it depends upon to provide high-speed “Sprint 4G” data services on some of its phones. It would increase Sprint’s access to the airwaves, meaning it could boost data speeds in coming years. However, cell towers using Clearwire spectrum have poor range, making it difficult to provide broad coverage.

Sprint Nextel Corp. said it will pay $2.97 per share for the nearly 50 percent stake in Clearwire stock it doesn’t already own. A board committee that excluded Sprint appointees approved the offer. The board hadn’t approved Sprint’s earlier offer of $2.90 per share, or a total of $2.1 billion, which had been made Thursday.

The agreement is a disappointment for Clearwire shareholders, who were hoping that the company would hold out for an even better offer. The stock fell 46 cents, or 13.7 percent, to close at $2.91 Monday.

A majority of Clearwire’s minority shareholders need to approve the deal. Of those, cable companies Comcast Corp. and Bright House Networks, as well as chipmaker Intel Corp. have agreed to vote in favor. They control 13 percent of the shares.

Analyst Christopher King at Stifel Nicolaus said it’s likely other shareholders will oppose the deal, arguing that Clearwire is worth much more. That means that final approval “may come down to a vote-counting exercise,” he said.

On a conference call, Clearwire CEO Erik Prusch defended the deal, saying that since Sprint was not interested in selling its stake to another company, it was the only possible buyer. Without a deal, the company may have had to give its debtholders control, wiping out the shareholders, he said.

Clearwire Corp., which is based in Kirkland, Wash., was formed by cellular pioneer Craig McCaw to take advantage of an emerging wireless technology, WiMax, which promised higher speeds and lower costs than conventional cellular technology.

Sprint was working on the same technology. In 2008, it rolled those operations into Clearwire, gaining a stake of more than 50 percent. Sprint pays Clearwire for access to its network, which it resells as Sprint 4G, but the technology has been orphaned as other wireless carriers have opted for another fourth-generation technology called LTE. Sprint is now building out its own 4G LTE network. Clearwire has its own plans to build out LTE, but has lacked the funds to do so — Sprint is its only major customer.

Sprint was also financially strapped, until it agreed in October to sell 70 percent of itself to Softbank Corp. of Japan for $20 billion. Clearwire shares nearly doubled in value when that deal was announced two months ago, as investors guessed that the Softbank deal meant Sprint would buy full control of Clearwire.

Sprint’s $2.97-per-share offer for Clearwire is more than twice the stock’s closing price of $1.30 on Oct. 10, just before the Sprint-Softbank deal was confirmed.

The Clearwire deal is contingent on the Softbank deal going through.

Sprint, which is based in Overland Park, Kan., said it expects both deals to close next summer.

Sprint’s stock rose 1 cent to close at $5.56.

___

Associated Press writer Tom Murphy in Indianapolis contributed to this story.

More By Peter Svensson.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
FBI reportedly joins Bachmann campaign finance probe
212 points213 points | 9 comments
vote
Jon Karl makes things worse: He regrets “inaccurate” Benghazi email but says his story based on it “still entirely stands.” Really. ABC News?
178 points179 points | 28 comments
vote
Paul Krugman’s right: Austerity kills. "In an economy where we’re all in the same boat, one person’s spending is another person’s income. So when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy."
144 points145 points | 80 comments
vote
“Jodorowsky’s Dune”: The sci-fi classic that never was.
70 points71 points | 15 comments
vote
Doug Henwood: Capitalism Thrives on Class Exploitation
45 points46 points | 5 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations