Why Clearwire Shares Were Cleared for Takeoff

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Clearwire (UNKNOWN: CLWR.DL  ) were cleared for takeoff today, up by 15% at the high, on reports that Sprint Nextel (NYSE: S  ) is actively considering buying the rest of the company.

So what: Sprint already owns 51% of Clearwire, but despite that majority ownership is unable to exert control over key strategic decisions. CNBC said that a deal could happen by the end of the year and Clearwire could be sold for greater than $3 per share.

Now what: Talk of Sprint acquiring the rest of Clearwire has persisted for ages, as it would give Sprint additional spectrum holdings that would make it more competitive with its larger rivals. With the Softbank deal that's currently pending, Sprint would have more funds at its disposal to expand its network, as well as potentially acquire Clearwire. This isn't the first time investors have heard these rumors before, and it won't be the last.

Interested in more info on Clearwire? Add it to your watchlist by clicking here.


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  • Report this Comment On December 11, 2012, at 4:44 PM, spokanimal wrote:

    Clearwire has exhibited good relative strength since the softbank bid for sprint came to light simply because the absorption of clearwire as well is virtually certain.

    Sprint wanted to wait until it received the remainder of it's buyout cash from softbank but as the days tick by, the focus is increasingly on the huge value of clearwire's spectrum which, net of clearwire's debt, is worth much more than $3 a share.

    Hesse realizes that the longer he waits, the more the market will likely force him to pay for clearwire as the value of all that spectrum increasingly comes to light.

    That's especially true in light of major shareholder, Mt. Kellet's, efforts to compel clearwire to monetize some of their spectrum in order to realize the tremendous value that's locked up in the company's assets.

    If sprint ends up acquiring the remainder of clearwire for less than $5 a share, it would be a significant breach of fiduciary duty on the part of clearwire's board. The $3/share price cited in the CNBC piece had better be treated as an "opening bid" or I see this thing landing in a court of law.

    Spokanimal

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