Satellite TV provider Dish Network Corp. (DISH) on Wednesday floated a significantly sweetened offer of $4.40 per share to acquire all of the common stock of wireless network operator Clearwire Corp. (CLWR), along with some of its spectrum assets. Clearwire shares skyrocketed nearly 22 percent in extended trading after smelling the Dish offer.
The move comes just two days ahead of the scheduled shareholder vote on majority shareholder Sprint Nextel Corp.'s (S) offer to acquire the 49.2 percent stake in Clearwire that it does not currently own.
The Dish offer represents a $1.00 per share or 29 percent premium over Sprint's current offer price of $3.40 per share, and is 33 percent higher than its initial offer of $3.30 per share.
Dish said the offer is not subject to any financing contingency, and has the approval of its board of directors. Dish added that the execution of the deal is not subject to any further internal approvals.
Clearwire shareholders are slated to vote on the Clearwire-Sprint deal at a special meeting of shareholders scheduled to be held on May 31. Dish said it intends to take its offer directly to Clearwire shareholders and will commence a tender offer for the outstanding Clearwire shares prior to the meeting.
While making the offer, Dish stated that it "remains committed to a commercialization of Clearwire's significant portfolio of wireless spectrum assets which will enable the combined company to provide a superior product and service offering to its customers."
"The Clearwire spectrum portfolio has always been a key component to implementing our wireless plans of delivering a superior product and service offering to customers," said Charlie Ergen, chairman and co-founder of Dish.
Dish noted that its offer provides a meaningful alternative to the significant group of minority shareholders of Clearwire that remain opposed to the Sprint merger. Dish added that the offer provides substantially greater value to Clearwire and its minority shareholders and a clearer path to value realization for all parties.
Earlier in the day, Clearwire reiterated its recommendation to shareholders to vote in favor of its proposed sweetened deal with Sprint, and encouraged stockholders to follow the recommendations of the two leading proxy advisory firms, Institutional Shareholder Services and Egan-Jones, and vote 'FOR' the deal on WHITE card.
Meanwhile, Clearwire criticized the negative recommendation provided by proxy advisory firm Glass, Lewis & Co., and scorned it for reaching a wrong conclusion and deemed its analysis as 'fundamentally flawed and inaccurate.
Last week, Sprint had sweetened its offer for Clearwire by 14 percent to $3.40 per share, valuing Clearwire at $10.7 billion. Sprint already owns a 50.8 percent stake in Clearwire.
After Sprint gains 100 percent control of Clearwire, Japan's third-largest mobile carrier SoftBank Corp. (SFTBY) has then proposed to acquire a 70 percent majority stake in Sprint for $20.1 billion or nearly 1.57 trillion yen, as agreed upon in mid-October 2012 by the two companies.
The closing of the Sprint-Clearwire deal is contingent on the consummation of Sprint's transaction with SoftBank. The Sprint and SoftBank transaction is expected to be consummated in July 2013 after it received clearance earlier in the day from the Committee on Foreign Investment in the U.S. (CFIUS).
DISH closed Wednesday's regular trading session at $39.25, down $0.89 or 2.22% on a volume of 1.59 million shares. Meanwhile, CLWR closed at $3.48, up $0.05 or 1.46% on a volume of 30.74 million shares, and skyrocketed $0.75 or 21.55% in after-hours trading.
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