Sprint Nextel, trying to ward off a Dish Network counteroffer for takeover target Clearwire, said the Dish bid isn’t “actionable” because it would break the law and Clearwire’s equity-holder agreement.
“Several rights demanded by Dish, including a contractual agreement to designate at least three Clearwire board members and the right to veto certain Clearwire actions, are violations of the EHA or Delaware law,” Sprint said Monday in a statement.
The satellite-TV provider controlled by billionaire Charlie Ergen topped Sprint’s bid for Bellevue-based Clearwire last week by 29 percent. Dish offered $4.40 a share, compared with Sprint’s $3.40.
Sprint, which owns slightly more than 50 percent of Clearwire, has been attempting to buy the rest since December. It increased its offer last month, seeking to satisfy a bloc of investors who oppose the deal.
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A full takeover would let Sprint tap the company’s wireless spectrum, helping the third-largest U.S. mobile-phone carrier bolster its network.
“It’s hard to see how Dish gets it done,” said Jennifer Fritzsche, an analyst with Wells Fargo.
Bob Toevs, a spokesman for Dish, didn’t have an immediate comment.
Crest Financial, the largest independent minority Clearwire shareholder, opposes the Sprint deal and said again Monday it wants an “open, competitive” bidding process for Clearwire.
Clearwire shares fell 1.3 percent to $4.42 Monday. The stock has climbed 53 percent this year, lifted by the bidding war.
Dish’s buyout proposal depends on obtaining at least 25 percent of Clearwire’s shares and would let the satellite company appoint three or more directors to the board.
Sprint, however, pointed to the law in Delaware, where Clearwire is incorporated. “Clearwire’s granting the governance rights required by Dish would effectively require Sprint to give up certain bargained-for rights in clear violation of Delaware law,” Sprint Chief Executive Dan Hesse said in the statement.
The deal also would violate an equity holders’ pact forged in 2008 when Clearwire began as a joint venture between Sprint and other companies. The rules wouldn’t allow the Dish bid to proceed, Sprint said.
“Having invested billions, I am sure you understand why Sprint is not willing to give up rights that were fundamental to the investment it made,” Hesse said.
Mike DiGioia, a Clearwire spokesman, acknowledged the Sprint letter Monday and said his company is still analyzing the Dish proposal.
“The special committee has not made any determination to change its recommendation of the current Sprint transaction, and we will have no further comment until they have finished their full review,” DiGioia said.
Dish has implied they are open to some sort of partnership, while at the same time maneuvering against Sprint for more control of Clearwire, said Fritzsche.
“Dish has done an amazing job of creating options for itself, so I don’t want to say it, but it looks like they’ve been out-lawyered,” she said.