Wireless network operator Clearwire Corp. (CLWR) said Wednesday that its board of directors has recommended stockholders to vote in favor of a sweetened takeover bid from the company's majority shareholder Sprint Nextel Corp. (S) at a special meeting of stockholders scheduled to be held on May 31.
On Tuesday, telecom services provider Sprint sweetened its offer by 14 percent to acquire the remaining 49.2 percent stake in Clearwire that it currently does not own. The revised offer stands at $3.40 per share, compared to Sprint's earlier offer of $2.97 per share made in December 2012, and values Clearwire at $10.7 billion.
The revised offer also tops a rival offer floated by satellite TV provider Dish Network Corp. (DISH) in early January to acquire all of Clearwire's common stock for $3.30 per share along with some of its spectrum assets.
Clearwire said that the special committee of its board of directors as well as the board have each approved the revised offer from Sprint. The sweetened offer from Sprint is subject to formal approval by a majority of Clearwire stockholders not affiliated with Sprint or Japan's third-largest mobile carrier Softbank Corp. (SFTBF).
In a statement, Clearwire said, "The Special Committee of the Board of Directors determined that the revised offer, when compared with other potential transactions reasonably available to the Company at this time, is the most favorable potential transaction to the Company's unaffiliated stockholders and that the terms of the revised offer are advisable, fair to and in the best interest of such stockholders."
Clearwire noted that the special meeting of stockholders will reconvene on Friday, May 31 at the Highland Community Center in Bellevue, Washington. The record date for stockholders entitled to vote at the special meeting remains April 2, 2013.
Clearwire had earlier said that it received commitments from Comcast Corp. (CMCSA), Intel Corp (INTC) and Bright House Networks LLC, who collectively own about 26 percent of Clearwire's shares not affiliated with Sprint, to vote their shares in support of the deal. SoftBank has also consented to the sweetened offer by Sprint, as required by its merger agreement with Sprint.
Sprint already owns a 50.8 percent stake in Clearwire. The company's revised offer represents a 162 percent premium over Clearwire's unaffected closing share price of $1.30 on October 10, 2012, when the Sprint-SoftBank discussions were first confirmed.
However, Sprint itself is the target of another takeover battle. Softbank had agreed in mid-October 2012 to acquire a 70 percent stake in Sprint for about $20.1 billion or nearly 1.57 trillion yen. Meanwhile, Dish Network submitted a $25.5 billion cash and stock takeover bid for Sprint in April, calling its offer superior to that of Softbank.
The closing of the Sprint-Clearwire deal is contingent on the consummation of Sprint's transaction with SoftBank. The Clearwire and SoftBank transactions with Sprint are expected to close by the middle of next year.
Evercore Partners is acting as financial advisor to Clearwire, while Kirkland & Ellis LLP is acting as its counsel. Centerview Partners is acting as financial advisor to Clearwire's special committee, while Simpson Thacher & Bartlett LLP and Richards, Layton & Finger, P.A. are acting as counsel. Blackstone Advisory Partners L.P. has advised the company on restructuring matters.
In Wednesday's regular session, CLWR is trading at $3.36, down $0.04 or 1.18 percent on a volume of 32.49 million shares.
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