Sprint is offering $2.97 per share for Bellevue, Wash.-based Clearwire in a deal that values the company at about $10 billion, including net debt and spectrum lease obligations of $5.5 billion.
Overland Park, Kan.-based Sprint, which already owns 51.7% of Clearwire, last week offered $2.90 per share, or $2.1 billion, for the company, but many minority shareholders had held out hope for a higher offer. Shares of Clearwire traded at $3 apiece, down more than 10%, on Monday morning premarket.
The future of Clearwire has been the subject of speculation since October, when Sprint agreed to sell a majority stake in itself to Japan's Softbank Corp. for $20 billion. Sprint needs Clearwire's spectrum portfolio to mount a full-scale challenge to wireless titans AT&T Inc. and Verizon Wireless, leading to talk that the company would try to take full ownership in Clearwire.
Sprint CEO Dan Hesse in a statement said that the deal "marks yet another significant step in Sprint's improved competitive position and ability to offer customers better products, more choices and better services."
As part of the deal, Sprint agreed to provide up to $800 million in additional financing to Clearwire in the form of exchangeable notes. Erik Prusch, CEO of the struggling target, in a statement said that Clearwire's board "unanimously determined that this transaction, which delivers certain and attractive value for our shareholders, is the best path forward."
The purchase requires regulatory approval along with the backing of a majority of Clearwire shares not affiliated with Sprint or Softbank. The deal has the backing of Clearwire's board, and Clearwire investors Comcast Corp., Intel Corp. and Bright House Networks LLC, which collectively own 13%, have committed to voting their shares in support of the transaction. Sprint noted that the deal offers a premium of 128% over Clearwire's shares traded prior to the Sprint-Softbank discussions becoming public.
But the deal is unlikely to go over well with some Clearwire shareholders who had argued that the company's minority shares are worth more than $6 apiece.
Stifel, Nicolaus & Co. analyst Christopher C. King in a note said that due to that opposition approval will likely come down to a vote-counting exercise, but added that with Comcast, Intel and Bright House in Sprint's corner a shareholder challenge to the deal is "an uphill battle at this stage."
Citigroup Global Markets Inc. acted as financial adviser to Sprint and Skadden, Arps, Slate, Meagher & Flom LLP and King & Spalding LLP acted as legal counsel.
Clearwire was advised by Evercore Partners Inc.'s Eduardo Mestre, Dan Mendelow, Surajit Datta, Vikas Raj, Kunal Karki and Shiv Daryani and a Kirkland & Ellis LLP team led by Joshua N. Korff, David B. Feirstein and Christopher A. Kitchen together with David Fox. Centerview Partners LLC acted as financial adviser and Simpson Thacher & Bartlett LLP and Richards, Layton & Finger PA acted as counsel to a special committee of Clearwire directors, with Blackstone Advisory Partners LP advising Clearwire on restructuring matters.
Raine Group LLC and Morrison Foerster LLP are advising SoftBank, while Credit Suisse Group and Gibson, Dunn & Crutcher LLP advised Intel.
-- Chris Nolter contributed to this report.
Palamon Capital Partners LP named Ali Rahmatollahi as associate partner and Christian A. Beck as a board of advisers member. For other updates launch today's Movers & shakers slideshow.
Antitrust scrutiny of the cablers' $67 billion merger is bringing over-the-top television into the picture as regulators try to gauge the deal′s effect on programming. More video