Old Whine in New Bottle for Clearwire Investors

Clearwire (UNKNOWN: CLWR.DL  ) investors are just three days away from voting either for or against Sprint Nextel's (NYSE: S  ) latest buy offering. But before they should accept at face value Clearwire's argument that Sprint's recently improved price for the transaction "is the best strategic alternative for shareholders," they should consider the history of the proposal.

Sprint's first offers of $2.60 and then $2.90 a share were rejected by Clearwire's board. Negotiations produced an increase to $2.97 deemed "fair and in the best interests of the company's non-Sprint class A stockholders," according to Clearwire CEO Erik Prusch in a conference call last December.

That $2.97-a-share price from Sprint "was its final offer," according to a Clearwire preliminary proxy statement filed with the SEC in February. Clearwire said it believed "SoftBank would not approve an offer by Sprint that was higher than the Merger Consideration, [that] it was the best offer that could be obtained... and that further negotiations could have caused Sprint to abandon its offer..."

But a revolt of non-Sprint Clearwire shareholders not liking Sprint's bid gave Sprint and its would-be owner SoftBank pause, causing them to raise what Clearwire said was the best and final offer 14.5% to $3.40 a share.

Deja vu all over again
"SPRINT SAYS THIS IS ITS BEST AND FINAL OFFER," declared Clearwire's most recent call for minority shareholders' acceptance of Sprint's latest proposal.

Clearwire also reminded shareholders that "Leading proxy advisory firms ISS and Egan Jones recommended Clearwire Stockholders vote 'FOR' [the] proposed transaction with Sprint at the previous offer of $2.97..."

Of course, if shareholders did follow those advisory firms' recommendations to vote for the transaction on the day the vote was to have taken place (that date was postponed due to Sprint's new offer), they would have taken a 14.5% haircut on their Clearwire shares.

Remember those unhappy shareholders who spooked Sprint's new offer? The biggest of the minority shareholders, Crest Financial with more than 8% of Clearwire's stock, is still not happy. Crest feels Clearwire is still undervalued and wants to hold off any vote on the offer until after Sprint's shareholders vote on whether or not Sprint should accept SoftBank's 70% buyout.

If SoftBank fails in that bid, Crest believes its rival for Sprint, DISH Network, could be ready with a counteroffer for Clearwire – or Clearwire might even get an offer directly from SoftBank.

So, it seems, Sprint's (and SoftBank's) latest offer hasn't placated Crest's -- and likely other shareholders' -- concerns. We only have three more days to see if "best and final" is really best and final.

The Motley Fool's chief investment officer has selected his No. 1 stock for the year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2456409, ~/Articles/ArticleHandler.aspx, 8/27/2014 9:25:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement