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Sprint Nextel sues to stop Dish Network’s bid for Clearwire shares

Updated: 2013-06-18T01:44:35Z

By MARK DAVIS

The Kansas City Star

Sprint Nextel Corp. took its merger plans from the boardroom to the courtroom Monday, suing its partner Clearwire Corp. and rival Dish Network Corp.

The 46-page lawsuit said Clearwire’s board of directors “panicked” by dumping a planned merger with Overland Park-based Sprint in favor of an “illegal” rival bid by Dish.

It also targets Dish and claims the satellite television company has worked to break up the merger and “drive Clearwire into financial ruin” for its own benefit.

A Clearwire bankruptcy, the suit said, would allow Dish to cheaply pick up the valuable wireless spectrum that is Clearwire’s chief asset. Spectrum is the range of federally licensed airwaves that carry wireless signals to smartphones and other devices.

Clearwire officials declined to comment. A Dish spokesman said the company was reviewing the filing and weighing its options.

The lawsuit follows months of back and forth between Dish and Sprint in a battle for control of both Sprint and Clearwire. Their sometimes-tense exchanges, which have played out in public statements and in regulatory filings, now have escalated into a legal scuffle.

In its lawsuit, Sprint is asking the Delaware state court to stop Dish’s efforts to buy Clearwire shares and award Sprint unspecified damages from Dish.

Dish bid to gain shares of Clearwire after Sprint had reached a merger agreement with its wireless network partner in December. Dish also bid in April to buy Sprint itself after Tokyo-based SoftBank Corp. had reached a deal last fall to buy control of Sprint.

Sprint rejected Dish’s offer as an incomplete proposal that could not be acted on. It gave Dish until Tuesdayto make its “best and final offer” for Sprint. A Sprint spokesman said the lawsuit does not change the deadline.

Shareholders of Sprint are set to vote on the company’s agreement with SoftBank on June 25.

Sprint had reached an agreement with Clearwire’s board to buy the roughly 49 percent of Clearwire it didn’t already own for $2.97 a share. It later raised the offer to $3.40 a share. Owners of those shares are set to vote on the deal next Monday.

Dish, however, launched a bid to buy shares directly from Clearwire shareholders at $4.40 a share in what Wall Street calls a tender offer. Clearwire endorsed that offer last week after it said Sprint declined to raise its offer.

In its lawsuit, Sprint said terms of the tender offer make it illegal under Delaware law, violate Clearwire’s charter, and violate Sprint’s rights as a Clearwire shareholder and business partner.

The tender offer includes agreements that would give Dish rights at the expense of other shareholders though Dish would own a minority of Clearwire’s shares, Sprint’s lawsuit said.

Specifically, it said, Dish would be able to name some Clearwire directors, veto changes to Clearwire’s corporate charter, veto any change in control of Clearwire and exercise pre-emptive rights over securities Clearwire might issue.

Sprint claims that Dish unsuccessfully sought such rights in negotiations with Clearwire’s board before it made the tender offer. Clearwire’s directors rejected the plans repeatedly only to agree when Dish’s maneuvers seemed to thwart the merger with Sprint, the lawsuit said.

To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com.

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