No Signs Of Buckling In The Sprint, Clearwire, Dish And Softbank Crossfire

What was once a simple takeover has now turned into a complicated, long drawn battle for power. Sprint’s agenda was pretty straightforward – it wanted to buy out 50% of Clearwire’s shares. Since it already owns half the company, owning the other half makes logical sense, as it gives Sprint dominance of Clearwire’s 11-million subscriber base. Sprint is currently the third largest mobile carrier in the U.S. and strategically this move would solidify its position in the telecomm industry. In December Sprint offered Clearwire $2.1 billion for the remaining shares, which boils down to $2.90 per share, and a deal was made.

Before the deal could go through however, Clearwire’s investors raised some issues. The share’s price has been surging since the announcement of the deal, and Clearwire’s current investors see Sprint’s offer as unfair. After some back and forth, Sprint raised its bid to $2.97 per share. Sprint, on its part, is also facing difficult times and is in the process of being bought out by Softbank, a Japanese telecomm and internet corporation. Softbank made an agreement with Sprint back in October under which Softbank will buy 70% of Sprint’s shares and inject $8 million capital into the ailing company. This money is intended for new investments, like the buyout of Clearwire shares.

To further complicate the matter, Softbank set a bid ceiling at $2.97 per share. Clearwire is already committed to Sprint to a certain extent, but they haven’t fully sealed it yet. Clearwire is holding off, hoping to get Softbank to increase that bid. The Washington-based wireless communications company can survive on its own only until the third quarter of 2013, by when this matter should, hopefully, be resolved. The final addition to this mix is Dish Network, the DBS provider. Dish made a bid for the same Clearwire shares in early January – a $3.30 per share bid. Dish has been trying to pause the Sprint-Clearwire deal for a while, and has now made its aims clear.

These conflicting arms have taken the deal to court, with FCC complaints against Sprint from Clearwire investors and Dish, Clearwire cannot immediately sign with Dish because of prior obligations to Sprint, but this new offer does give it some leverage to squeeze more money out of Softbank. Softbank, on the other hand, cannot afford to look too malleable, since it is the Big Boss after all!