Wireless carrier Sprint Nextel Corp (S.N) said it has acquired a majority interest in Clearwire Corp CLWR.O by buying a stake from the company's founder.
A similar attempt by Sprint to take control of Clearwire last week was scuttled by a dispute with Intel and other investors.
Clearwire shares fell more than 8 percent as the new arrangement appears to have dashed hopes that Sprint would buy the company outright.
"Investors were hoping for a takeover premium and all they got was this mini-takeover," said Scott Rostan, a former M&A banker who founded Training The Street, which offers financial training for corporate clients.
Sprint reached the deal with Eagle River Holdings on Wednesday and will control a 50.8 percent stake in wireless provider Clearwire, it said in a securities filing on Thursday. Eagle River is the investment vehicle of Clearwire founder and wireless industry veteran, Craig McCaw.
But in a sign the deal might face a challenge, chipmaker Intel Corp (INTC.O), one of Clearwire's shareholders, has received a notice of right of first offer from Eagle River and has 30 days to respond, Intel spokesman Chuck Mulloy told Reuters.
Shareholders receive the right to buy the stake before anyone else under first offer.
However, in September, Time Warner Cable Inc TWC.N said it was selling its stake in Clearwire following the cable company's agreement to sell spectrum to Verizon Wireless, an opportunity Intel could have taken to buy more shares of Clearwire if it wanted, D.A. Davidson & Co analyst Donna Jaegers said.
"Intel didn't show up to the party … A lot has changed in the last two weeks but you would think that if Intel were interested, then it would have shown more interest when Time Warner Cable wanted to sell their stock," she said.
A Sprint spokesman said all other shareholders had the right to first offer. He declined to comment on whether Sprint had received any indication on how the other shareholders would decide.
He also declined comment on what caused the dispute that stopped the previous attempt to buy Eagle River's stock.
The other shareholders, Comcast Corp (CMCSA.O) and Bright House Networks, were not immediately available for comment.
The Clearwire deal comes less than a week after Sprint agreed to sell 70 percent of itself to Japan's Softbank Corp (9984.T) in a $20 billion transaction.
Analysts and investors widely expected Sprint to subsequently acquire, or at least assume control of, Clearwire, in which it already held a nearly 50 percent stake.
Clearwire's spectrum is crucial to planned high-speed upgrades to Sprint's network, and its planned technology platform is similar to one already adopted by Softbank.
FBR Capital Markets, in a note to clients on Thursday, said the deal eliminated a major risk for Sprint, which can now control Clearwire's valuable spectrum assets and have unfettered access to them.
"This precludes anyone else from coming in and gives Softbank clarity on Sprint's assets," said Rostan, adding that once Softbank and Sprint close their deal "you will likely see them buy out Clearwire."
Yet the deal could actually make Sprint's financial picture look worse, one analyst said, if Sprint has to consolidate Clearwire's results and debt onto its own balance sheet. Whether it will have to do so is still not clear.
"While we believe Clearwire shares could be volatile today ... there remain many important (and unanswered) questions in our view," Wells Fargo analyst Jennifer Fritzsche said in a client note.
For purposes of the deal, Sprint paid the equivalent of $2 per Class A share for Eagle River's 30.9 million shares, according to the filing. Sprint also purchased fractional interests in some Class B shares, which added to the price.
In total, Sprint said it would pay $100 million for the acquisition, all from working capital.
Sprint also disclosed that Eagle River had sent notice on October 13 that it wanted to sell, but that other Clearwire shareholders, including Intel and Comcast, objected to the form of the sale offer.
Sprint said it and Clearwire "disagree with the merits of the objection and allegation" but that in the interests of avoiding a dispute had withdrawn that earlier proposal in favor of the new one made Wednesday.
Representatives of Comcast were unavailable for comment Thursday morning on the nature of its objections. The two collectively hold about 16 percent of Clearwire's Class A stock, according to Thomson Reuters data.
Clearwire shares fell 8.62 percent to $2.06 in afternoon trading. The stock was trading at $1.30 before news of the Sprint-Softbank deal broke last week.
(Reporting by Ben Berkowitz; additional reporting by Noel Randewich; Editing by Gerald E. McCormick, Lisa Von Ahn, Sofina Mirza-Reid, Bob Burgdorfer and Kenneth Barry)