Sprint Nextel Corp. raised its bid for Clearwire Corp. for a second time Thursday, trying to end its battles with rival bidder Dish Network Corp.
Sprint upped its bid for Clearwire to $5 a share, in a new deal endorsed by Clearwire’s board of directors.
In supporting Sprint’s new bid, Clearwire’s board reversed its decision last week to dump a previous merger agreement with Sprint in favor of a $4.40 a share offer from Dish. The new Sprint deal also won support from some shareholders that had opposed previous bids.
Clearwire, which is Sprint’s wireless network partner, has valuable wireless airwaves that are key to Sprint’s plans to pair up with Tokyo-based SoftBank Corp. Sprint already owned a majority share of Clearwire, but faced a last-minute attempt by Dish to derail its bid to buy up the rest of the company.
Dish had also made a competing bid to buy Sprint out from under SoftBank, prompting SoftBank to offer new terms in its deal with Sprint. But Tuesday, Dish failed to follow up, missing a deadline Sprint had set for Dish’s “best and final offer.”
SoftBank chief executive Masayoshi Son noted the events surrounding Dish’s bids for Sprint and Clearwire during SoftBank’s annual shareholders meeting this morning in Japan. Still, he remained cautious about the outcome.
“That’s quite a turnaround of events and the situation is in favor of us right now,” Son said, according to an interpreter. “It’s too early to heave a sigh of relief. Nothing can be ruled out until the end of the shareholders meeting at Sprint.”
Some analysts said Sprint’s new Clearwire deal and Dish’s inaction on Sprint likely ends the the bidding wars over both Sprint and Clearwire. Dish, led by its billionaire Chairman Charlie Ergen, had fueled the battles with a series of disprutive bids.
“It’s finally over. I think $5 a share does it, and Charlie has to go away now,” said Berge Ayvazian, an industry consultant at HeavyReading.com.
Dish’s bids for Sprint and Clearwire had led to reports that SoftBank was considering a deal for T-Mobile as an alternative way to enter the U.S. market should its plans with Sprint unravel.
Son also acknowledged that SoftBank has considered T-Mobile as an alternative but that the No. 4 U.S. wireless company is not his current target.
“The prospect for the Sprint deal closing is getting better. For now I’d like to focus our efforts on closing the Sprint deal,” Son said.
Industry speculation now centers on whether Dish will pursue T-Mobile.
“How amazing how things have changed in just a couple of days,” said Jeff Silva, a telecommunications industry analyst at Medley Global Advisors.
But Silva cautioned that “one should never count out Charlie Ergen” and that the shifting momentum could swing again.
“Today, it looks pretty good for Sprint,” Silva said.
Thursday’s joint announcement from Sprint and Clearwire said several Clearwire shareholder groups that had opposed their original merger plans have agreed to support the newest agreement.
Their support, the joint announcement said, means 45 percent of the shares that Sprint doesn’t already own now support its buyout plans.
Sprint owns just over 50 percent of Clearwire’s stock and is trying to buy the rest. It said it expects a majority of the other shares to be voted in favor of the new deal.
Clearwire moved the date of its shareholders meeting to July 8. It had been set for Monday.
The delay gives Dish time to consider its options. A company spokesman declined to comment.
The company’s pursuit of Clearwire and Sprint are part of Ergen’s desire to enter the wireless market. He envisions pairing Dish’s satellite television service with a wireless mobile service to provide consumers with video, broadband and voice services in and out of their homes.
Dish already owns some wireless spectrum, the licensed airwaves that carry mobile traffic such as video and app downloads. But it needs more and a wireless network to put it to use.
Shares of Clearwire climbed 35 cents and closed Thursday at $5.05, a 7.3 percent increase and higher than the new merger agreement would pay. It suggests some buyers are betting on another bid from Dish.
Sprint’s shares gained 7 cents and closed at $7.07.
Dish’s offer to pay $4.40 for Clearwire shares had topped Sprint’s $3.40 a share deal, which itself had been an increase from an original agreement to buyout Clearwire’s other shareholders at $2.97 a share.
“We got into a competitive bidding situation along the way, and our shareholders will benefit from it,” Clearwire chief executive Erik Prusch told Bloomberg News. “This is an absolutely fantastic deal.”
Clearwire’s new deal with Sprint changed some terms of the previous agreement. Clearwire, for example, would owe Sprint a breakup fee of $115 million should the deal not go through.
Dish’s bid to buy Clearwire shares doesn’t rely on a deal with the company’s board of directors. It offered to buy shares directly from investors in what Wall Street calls a tender offer.
Once Dish made the offer, Clearwire advised its shareholders to vote against Sprint’s deal at the meeting set for Monday and sell their shares to Dish.
Analysts said it would be easy enough for Dish to boost its tender offer price above the $5 in the new Sprint agreement with Clearwire.
But its bid is conditioned on getting at least 25 percent of Clearwire’s shares. Support for Sprint’s new deal from some of the previously reticent shareholders reduces the likelihood that Dish would meet its goal.
Sprint’s shareholders are set to vote Tuesday on the agreement to sell 78 percent of the Overland Park-based company to SoftBank.