The satellite TV operator DISH
Network Corp. (DISH) has decided
not to pursue the acquisition of Sprint Nextel Corp. (S). In Apr 2013, DISH had made a counter bid
of $25.5 billion to acquire Sprint, the third largest telecom operator in the
U.S. In Oct 2012, Softbank of Japan made a $20.1 billion bid for Sprint.
Recently, Softbank increased its offer price to $21.6 billion.
DISH announced that it will now focus on
acquiring a 49% stake in the wireless wholesaler Clearwire
Corp. (CLWR). Sprint is the 51%
shareholder of Clearwire. The battle for Clearwire started in Dec 2012, when
Sprint proposed a $2.97 per share bid to acquire the remaining 49% of the
former. In Jan 2013, DISH offered a counter bid of $3.30 per share. In May 21,
2013, Sprint hiked its bid to $3.40 per share to ensure favorable voting.
However, DISH raised its bid to a substantial $4.40 per share of Clearwire,
which is 29% higher than the revised bid of Sprint.
DISH’s proposal has a total consideration of $6.5
billion and includes three conditions. First, the company must get at least 25%
of Clearwire’s controlling stakes to nominate board members. Second, DISH will
pay $2.2 billion to get a 24% stake of Clearwire’s 2.66 GHz spectrum. Finally,
Clearwire has to build and manage a wireless network for DISH.
DISH’s new bid contains another major issue. At
present, Clearwire is reeling under a financing deal with Sprint in the form of
convertible notes with a coupon rate of a mere 1% per annum. DISH has decided to
pay an additional $800 million to Clearwire in order to terminate its financing
deal with Sprint. In return, Clearwire should allow DISH to convert those notes
into common outstanding shares of Clearwire at the rate of $2.50 per share.
In Jun 2013, the board of directors of Clearwire
unanimously recommended its shareholders to accept DISH’s offer. The final
decision will be taken at the Special Meeting of Stockholders on Jun 24, 2013.
However, on Jun 17, 2013, Sprint filed a legal suit against DISH related to its
proposed acquisition of Clearwire.
In May 2013,
DISH executed a Letter of Intent with regional wireless network operator, NTELOS Holdings Corp. (NTLS) to deploy a fixed-mobile broadband network for
high-speed Internet service in areas served by the latter. Accordingly, the two
entities jointly launched broadband service across rural Virginia by utilizing
2.5 GHz band of airwaves on Jun 17, 2013. LINK
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