Dish Network raised its bid for Clearwire, topping Sprint Nextel’s offer for the Bellevue-based wireless-network operator by 29 percent, just two days before Clearwire shareholders are meeting to vote on the Sprint deal.
Dish, offering $4.40 a share in cash, is looking to buy all of Clearwire’s outstanding shares, though it would accept a deal for anything above 25 percent of the stock, according to a statement Wednesday. The satellite-TV provider had previously bid $3.30 a share for Clearwire, leading Sprint to raise its price to $3.40 last week.
The move creates fresh headaches for Sprint, which owns slightly more than 50 percent of Clearwire and has been attempting to buy the remaining stake since December.
After Sprint increased its offer last week, Clearwire shareholder Crest Financial and a group of investors led by Mount Kellett Capital Management both rejected the new terms. They say the deal undervalues Clearwire and its wireless spectrum.
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“It is obviously a better offer,” said Clearwire individual investor David Weber, referring to the new Dish bid. “But I’d be surprised if Sprint doesn’t top that. It doesn’t sound like the bidding war is over.”
Clearwire shares jumped nearly 21 percent to $4.20 in after-hours trading after the offer was disclosed. The stock had closed at $3.48 in regular trading.
Clearwire investors are scheduled to vote on the Sprint takeover deal Friday.
The bid totals about $2.5 billion and values the entire company, including debt and Sprint’s own equity, at $10.7 billion. Dish plans to commence a tender offer for the outstanding Clearwire shares before that meeting.
“The special committee of Clearwire’s board of directors has received Dish network’s offer and will review it to determine the best course of action for the company and its stockholders,” Mike DiGioia, a Clearwire spokesman, said in a statement. “The special committee has not made any determination to change its recommendation of the current Sprint transaction.”
Dish made a separate play for Sprint itself last month, offering $25.5 billion for the wireless carrier as part of a plan to expand into the mobile-phone business. In that takeover fight, Dish is vying with SoftBank, which agreed in October to buy a 70 percent stake in Sprint for $20.1 billion.
Tokyo-based SoftBank won a round in that fight Wednesday, when it received U.S. national-security clearance for its takeover of Sprint. Dish had argued that allowing SoftBank to control a U.S. phone network would compromise national security. SoftBank’s clearance removes some ammunition from Dish in its attacks on the deal.
As part of that transaction, Tokyo-based SoftBank would give Sprint a cash infusion of $8 billion, helping it pay for Clearwire.
While Sprint’s majority ownership of Clearwire gives it the inside track, Dish could play the role of spoiler, said Chetan Sharma, an independent wireless analyst in Issaquah.
“They are just trying to make it difficult for SoftBank to acquire Sprint and Clearwire,” he said.
Dish sees Clearwire’s assets as a way to further its push into mobile service. Billionaire Charlie Ergen, who co-founded the satellite company, has already assembled his own collection of airwaves that could be used with wireless devices, giving him something to pair with Clearwire’s spectrum.
“We are committed to completing a transaction that will permit Dish to commercialize its significant portfolio of wireless spectrum assets,” the Englewood, Colo.-based company said in a letter to Clearwire on Wednesday.
Earlier this week, shareholder-advisory firm Glass, Lewis & Co. advised Clearwire investors to vote against the Sprint deal. Glass, Lewis broke from Institutional Shareholder Services and Egan-Jones Ratings, which both endorsed Sprint’s earlier offer of $2.97 a share, citing Clearwire’s dim prospects as an independent company.
Clearwire has said it faces a cash crunch and needs at least $1.7 billion to keep operating, adding urgency to complete a deal. To help Clearwire stay afloat, Dish said Wednesday that it would provide financing of $80 million a month. That matches a similar program offered by Sprint.