Clearwire created a severance plan for employees in the event of a takeover, heightening speculation about a combination of the Kirkland...
Clearwire created a severance plan for employees in the event of a takeover, heightening speculation about a combination of the Kirkland wireless Internet company with Sprint Nextel.
Benefits would include a cash payment to executives of twice their target annual compensation, Clearwire said Tuesday. The move, typically used to guard against an acquisition, isn’t a defense this time, Stanford Group analyst Michael Nelson said. Instead, it’s meant to soothe workers concerned about their jobs, he said.
“It’s an extremely strong signal they are likely in intense negotiations with Sprint and other parties,” the New York analyst said. “A deal could be announced sooner rather than later.”
The Wall Street Journal Web site reported late Tuesday that the two biggest U.S. cable providers, Comcast and Time Warner Cable, are discussing a plan to provide funding for a new wireless company that would be operated by Sprint and Clearwire. The story, citing unidentified people familiar with the talks, said the two might put as much as $1.5 billion into building a nationwide WiMax network.
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Clearwire, founded by Craig McCaw, has lost money for four straight years as it builds a network using WiMax technology to blanket cities with wireless Internet access. To defray costs, the company has discussed building the network jointly with Sprint.
Google, Intel or Best Buy, all of which may benefit from greater wireless Internet access, also may be interested in a Clearwire venture, Nelson said.
Clearwire stock rose $1.34, or 11.1 percent, to $13.39 Tuesday. The stock has dropped 2.3 percent this year. Sprint shares, down 51 percent this year, fell 16 cents to $6.42 Tuesday.
Clearwire’s severance plan also would provide executives with health care for two years, acceleration of unvested stock awards and other benefits.
The severance plan would take effect in the event of a merger or reorganization, or if the board loses control, according to Tuesday’s filing.
The program wouldn’t take effect if the buyer is Intel, Clearwire’s largest shareholder, or Eagle River Holdings, its second largest. Eagle River is a group of closely held investment companies formed by McCaw.
The plan isn’t a signal that a takeover is coming, said Clearwire spokeswoman Susan Johnston. “We are implementing the plan to bring our retention policies in line with other public companies in the sector,” she said.
It comes four weeks after Sprint Chief Executive Officer Daniel Hesse disclosed talks with Clearwire about a potential venture.
Clearwire may combine its assets with Overland Park, Kan.-based Sprint to form a new entity, Nelson said. The venture also may include funding from Intel, which is promoting WiMax technology, Nelson said.
Paul Saleh, Sprint’s former chief financial officer, said in December that Sprint might spin off its WiMax service and seek investors to reduce the cost of building the network. Saleh stepped down in January.
James Fisher, a spokesman for Sprint, and Kari Aakre, a spokeswoman for Intel, both declined to comment.
Google said it doesn’t comment on rumor or speculation.
Susan Busch, a Best Buy spokeswoman, didn’t immediately respond to a call seeking comment.
McCaw may not be looking for a payout with a potential Clearwire deal, Nelson said. “I would expect him to still maintain through Eagle River Holdings a significant amount of interest and capital in the new entity,” Nelson said.
Information from Bloomberg News reporters Crayton Harrison and Ian King is included in this report.