Yesterday, Sprint made a $2.1 billion offer to purchase the remaining 49% of Clearwire it doesn’t own. That’s roughly $2.90 per share of Clearwire. Today Softbank told Sprint that it is only allowed to bid up to $2.97 per share, which is what Sprint paid when it bought a small stake of Clearwire from its founder Craig McCaw’s Eagle River Holdings LLC.
The problem is that Clearwire was expecting a bid of around $5-$8 per share. Clearwire shareholders criticized Sprint, the #3 carrier, for making such a low offer. Crest Financial, who has around a 3% share of Clearwire, stated,
“We intend to take whatever actions we can to protect Clearwire shareholders against the unfair dealing by Sprint and other parties.”
Crest Financial had tried to thwart Sprint’s deal with Clearwire as soon as their negotiations became public information.
An anonymous shareholder stated,
“This deal should happen. It’s good for Clearwire. It’s good for Sprint. $2.90 is not the right price.”
A JPMorgan analyst said
“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 the $2.90 bid.”
A Pacific Crest analyst, Michael Bowen, sided with Sprint however, and stated,
“Sprint should not pay more than $3 per share for Clearwire.” He also added that Sprint may be pressured into eventually paying around $3.50 per share.
We’re not sure if Clearwire shareholders are in a position to criticize Sprint’s offer. Clearwire has been in the red for a while now, and Sprint’s offer is one of very few options for this company to survive. Clearwire had stated that it only has enough to last until Q3 of 2013.
Sprint’s offer may be a little lowball, but paying $5-$8 is also pushing it a bit too far for a company that’s in jeopardy. Sprint and Clearwire have a lot of discussing to do, but Softbank may be right in imposing a $2.97 per share limit for Sprint.