* Sprint offers $2.90/share, 5 percent above Wednesday close
* Some shareholders say they are not happy with the deal
* Clearwire says reviewing the offer
* Deal requires ok from Clearwire minority shareholders,
* Clearwire shares close up almost 15 pct at $3.16
By Himank Sharma and Sinead Carew
Dec 13 Sprint Nextel Corp, the majority
owner of Clearwire Corp, has offered $2.1 billion to
buy the rest of the wireless service provider but it may have to
raise its offer to get enough shareholder backing to secure a
Clearwire, which said it is reviewing the offer, saw its
share jump almost 15 percent on Thursday, suggesting that
shareholders hoped for a higher bid.
Sprint offered $2.90 per share and said it would also
provide interim financing of $800 million to cash-strapped
Clearwire if shareholders agree to the $2.90 offer.
Sprint, which already owns 50.45 percent of Clearwire, needs
approval from holders of 24.8 percent of Clearwire shares before
it could take control of the company.
One Clearwire shareholder Crest Financial, criticized
Sprint's offer on Thursday saying in a public statement that the
deal was not in the interests of Clearwire shareholders.
Crest said it "intends to take whatever actions it can,
including petitioning the Federal Communications Commission, to
protect the rights of Clearwire shareholders against unfair
dealing by Sprint and other parties."
Several other shareholders also told Reuters on Thursday
that they were not happy with Sprint's current terms for the
deal as they believe the company is worth more.
"This deal should happen. It's good for Clearwire. It's good
for Sprint. $2.90 is not the right price," said a representative
for one shareholder who suggested that a per share offer in the
$5 to $8 range would be more acceptable to investors.
The person asked not to be named due to a lack of
authorization to talk in the public about investments. Other
shareholders also cited $5 as the lowest threshold for a deal.
Analysts also said that Clearwire shareholders would be very
unlikely to accept Sprint's offer, which would allow the No. 3
U.S. mobile service provider to take full control of Clearwire's
spectrum holdings to bolster its own wireless data services.
While Clearwire has been looking for new financing, analysts
said that its need is not so urgent that it should accept
Sprint's offer which they described as a "starting point."
"With a year of liquidity on the books and the alternative
of raising additional equity or refinancing debt at this level,
Clearwire is hardly without options, and we don't see why the
company would necessarily jump at a the $2.90 bid," JPMorgan
analyst Philip Cusick said in a research note.
Wells Fargo analyst Jennifer Fritzsche said Sprint's offer
price compared poorly to other deals in the U.S. wireless
industry that involved sales of wireless spectrum holdings. She
calculated that comparable deals had valued wireless spectrum at
fifty percent more than Sprint was offering to pay Clearwire.
Sprint declined to comment on whether it would revise its
offer. Its proposed price is 5 percent higher than Clearwire's
closing stock price on Wednesday, but more than double its $1.30
price on Oct 10.
Clearwire shares have risen sharply since then on increasing
investor speculation that loss-making Sprint would use new
financing from Japan's Softbank Corp to buy Clearwire.
Sprint agreed in October to sell a 70 percent stake to Softbank
for $20 billion.
CLEARWIRE REVIEWING OFFER
Clearwire, which also counts Sprint as its biggest customer,
has long been seen by analysts as an acquisition target for
Sprint, which needs to improve its network to compete with
bigger rivals Verizon Wireless and AT&T.
Clearwire said in a regulatory filing on Thursday that it is
currently in talks with Sprint regarding a "potential strategic
transaction" and that a special committee of its board of
directors has been reviewing the potential deal.
It did not offer an immediate response to the $2.90 offer.
Clearwire, which has been looking to raise more financing to
upgrade its network and to keep the business afloat, has said
that it has enough money to last it until the third quarter.
The Sprint offer values Clearwire at around $4.2 billion.
Another shareholder Mount Kellet Capital Management LP and
has recently expressed concerns over a deal with Sprint,
suggesting that Clearwire should look at other options.
Between Mount Kellet and Crest the two investment firms own
nearly 15 percent of Clearwire's publicly traded shares.
Crest financial filed a lawsuit on Tuesday against Clearwire
and Sprint to try to thwart a deal after reports emerged about
discussions between the companies.
Clearwire's other minority shareholders include Intel Corp
and Comcast Corp, which own around 12.4
percent between them. Sprint has been in discussions with those
companies about purchasing their shares, according to people
familiar with the matter.
Mount Kellet did not comment on the offer on Thursday. Intel
said it was evaluating Sprint's offer while Comcast declined to
A purchase of Clearwire would also need the approval of
Softbank and is contingent on Sprint's planned sale of 70
percent of the company to Softbank, Sprint said in the
regulatory filing. ()
Clearwire shares closed up 41 cents or more than 14 percent
to $3.16 on Nasdaq after the news. Sprint Nextel shares closed
down 2 cents at $5.64 on New York Stock Exchange.