Dish Boosts Clearwire Share Price With Acquisition Offer
Clearwire’s (NASDAQ:CLWR) share price jumped by 8.90 percent to $3.18 on the news that Dish Network (NASDAQ:DISH) has made an acquisition bid for the wireless service provider, setting the stage for a takeover battle with Sprint (NYSE:S), the fourth-larges tmobile operator in the US.
According to the Financial Times Dish is offering $2.2 billion (£1.37 billion) for a large amount of spectrum assets and $3.30 a share, or a 13 percent premium over Tuesday’s closing price, for all of Clearwire’s common stock. The offer is a significant step up on Sprint’s $2.97 a share bid and was welcomed by some of Clearwire’s shareholders, who felt accepting the Sprint bid would mean the company being sold for too little.
While it has already agreed to a buyout by majority shareholder Sprint, Clearwire said it plans to talk to Dish and keep its options open by not drawing on financing offered by Sprint. The Dish bid values Clearwire at about $5 billion (£3.12 billion).
Charlie Ergen, Dish’s straight-talking founder and chairman, says he wants to enter the mobile broadband market, and one of the options is to partner with another carrier and benefit from the synergies that this would create. “It’s hard for me to imagine that what Dish wants is Clearwire,” said Craig Moffett, analyst at Sanford C. Bernstein & Co, as quoted by Bloomberg. “It could be a chess move to get a partnership with Sprint.” Market experts have speculated Ergen is amassing spectrum licenses – an increasingly valuable asset as use of media-consuming mobile devices intensifies – to sell it for a handsome profit. Spectrums are the radio frequencies via which wireless signals travel over the air. Due to their finite nature increased mobile data consumption means that the rights to spectrums are becoming increasingly more valuable.
Instead of a call for partnership, some analysts see Dish’s bid as merely a power play, or even a retaliatory move against Sprint, with which the cable operator has clashed with in the past over regulatory approvals for spectrum acquisitions. Even if Ergen fails in his attempt to acquire Clearwire and its spectrums, it’s likely he will have forced Sprint to pay a bit more money.
!m[The Cable Operator Ready to Meet Sprint in a Takeover Battle for Valuable Spectrum Rights](/uploads/story/1157/thumbs/pic1_inline.png)
Sprint said it believes its agreement to acquire Clearwire “offers Clearwire shareholders certain and attractive value” and is “superior to the highly conditional Dish proposal”. “Sprint does not intend to waive any of its rights and looks forward to closing the transaction with Clearwire,” the company stated.
Dish share price fell by 0.61 percent to $35.75 in afterhours trading. The stock has appreciated by 23.35 percent in a year. Sprint share price also declined by 2.51 percent reaching $5.82. It has increased its value by 172 percent since the beginning of 2012.
**Softbank to acquire Sprint and Clearwire**
While Sprint is trying to buyout Clearwire it is also selling 70 percent of its stock to Softbank Corp of Japan for $20 billion (£12.5 billion). Dish has been trying to block the deal, which gives the Japanese telecommunications company a foothold in the world’s most lucrative wireless market. Last month Ergen’s company asked the US telecom regulator for more time to file an official objection to Sprint’s proposed sale to Softbank in light of its intentions to buy out Clearwire.
**Clearwire share price as of 09.01.2013 7.30 GMT (afterhours trading) was $3.18
Sprint share price as of 09.01.2013 7.30 GMT (afterhours trading) was $5.82
Dish share price as of 09.01.2013 7.30 GMT (afterhours trading) was $35.75**
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.