* Investors holding 210 million Clearwire shares are unhappy
with Sprint offer
* Sprint needs more than 362 million shares out of 725
million for approval
* Dish offer has emboldened Clearwire shareholders to hold
out for higher offer
By Sinead Carew
NEW YORK, Jan 18 Investors holding 29 percent of
the outstanding minority shares of Clearwire Corp are
unhappy with Sprint's $2.2 billion bid for the wireless service
provider and are pushing for a higher offer.
Sprint, the No. 3 U.S. mobile service provider, announced on
Dec. 17 an agreement to acquire the outstanding shares of
Clearwire it doesn't already own for $2.97 per share. While
Sprint holds a more than 50 percent stake in Clearwire, the deal
requires approval from holders of just over 50 percent of
Clearwire's minority shares.
Securing that approval is looking increasingly tenuous,
Investors collectively owning almost 211 million shares of
Clearwire - roughly 29 percent of its minority shares - told
Reuters they do not think Sprint's bid is high enough and that
they would not be happy casting their votes for the deal.
Crest Financial, which owns about 8 percent of Clearwire's
minority shares, immediately sued to block the deal, for
example. Crest's argument, echoed by other investors, is that
Clearwire is worth a lot more than $2.97 per share as it has
valuable wireless spectrum that would be crucial for Sprint.
While the 29 percent alone would not be enough to vote down
the deal, its underscores the growing disenchantment Clearwire's
minority shareholders have with Sprint's offer. Reuters was not
able to reach all Clearwire shareholders.
For the deal to go through, Sprint needs approval from
investors holding more than 362 million shares out of the
roughly 725.89 million total minority shares outstanding. Share
figures are based on the latest publicly available information.
Sprint said in December that it had support from three
strategic investors - Comcast Corp, Intel Corp
, and Bright House Networks LLC - who collectively own
about 125.4 million Clearwire shares.
Excluding the almost 211 million votes from the investors
Reuters spoke to and the 125.4 million shares supporting the
deal, investors with about 389.8 million outstanding Clearwire
shares have not disclosed if they will approve the deal or force
Sprint to revise its offer.
HIGHER DISH OFFER
Dish Network, controlled by mercurial billionaire
Charlie Ergen, made a $3.30 per share counter-offer for
Clearwire on Jan. 8, putting further pressure on Sprint to raise
its bid. Clearwire's board is reviewing the Dish bid but said
that the proposed deal may not be permitted because of
Clearwire's existing legal obligations to Sprint.
However, the Dish bid has convinced many of Clearwire's
minority shareholders that enough discontent exists to
potentially block Sprint's bid.
"Sprint can't get 50 percent of those shares. They've no way
to get them," said Chris Gleason, a managing partner at Taran
Asset Management, which owns about 3 million Clearwire shares.
Mount Kellett, an investment firm with about 7.3 percent of
Clearwire's minority shares, said Dish's offer is proof Sprint's
bid is "grossly inadequate." Mount Kellett also said it is
likely to be voted down and accused Clearwire's board of
breaching its fiduciary duties for accepting the bid.
Another investment manager whose firm's holdings include
Clearwire shares said the Dish offer was a turning point.
"If somebody was on the fence about saying no to Sprint,
they're not on the fence any more," said the investment manager
who asked not to be named due to their firm's policy on media
"Anybody who thinks $2.97 is a full and fair value has
already exited," said the person, referring to the fact that
Clearwire shares have traded well above Sprint's offer price
since Dish announced its bid. Clearwire shares were up 6 percent
above Sprint's offer price at $3.16 on Friday.
This person described the $2.97 offer as "dead on arrival."
Sprint, which has agreed to sell a 70 percent of its own
shares to Japan's Softbank Corp, has said that it
believes its Clearwire bid is superior to Dish's offer.
Sprint argues that the Dish deal is not viable because it
comes with conditions Clearwire could not accept.
While Sprint said in December that it had commitments from
Intel, Comcast, and Bright House, it is worth noting that those
companies have not updated their position since the Dish offer
and declined to comment for this story.