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.