Yesterday, in a surprising move,
DISH Network Corp.
) stated its keenness to purchase the remaining 49% stake of 4G
) for $3.30 per share. DISH, the second largest satellite TV
operator in the U.S., is desperately trying to enter into the
lucrative wireless market. Recently, DISH Network got the FCC nod
to install a nationwide wireless network using its 40 MHz
spectrums, which the company purchased in 2011.
On the other side,
Sprint Nextel Corp.
), the 51% shareholder of Clearwire has given a $2.97 per share
bid to acquire the remaining 49% of Clearwire last month. Sprint
has undertaken a massive project to expand its LTE network.
DISH's proposal is undoubtedly better than Sprint's but it is
contingent upon Sprint's decision to waive its own shareholder
right, which in all likelihood, the company will not do.
Secondly, DISH's proposal, has a total consideration of $5.15
billion and includes several conditions. Per the conditions, the
company must get at least 25% of Clearwire's controlling stake to
nominate board members, it will pay $2.2 billion to get a 24%
stake of 2.66 GHz spectrum of Clearwire, Clearwire will build and
manage a wireless network for DISH and DISH will provide an
additional $800 million to Clearwire to terminate its financing
deal with Sprint.
Clearwire stated that a special committee of its Board of
Directors will discuss the proposal with DISH. At the same time,
the company also mentioned that the special committee so far, has
not made any change to its recommendation on the already
submitted offer by Sprint.
We reaffirm our long-term Neutral recommendation on both DISH
and Sprint. Currently, both the companies enjoy a short-term
Zacks #3 Rank (Hold) on their respective stocks. Clearwire also
enjoys a short-term Zacks #3 Rank (Hold) on its stock.
CLEARWIRE CORP (CLWR): Free Stock Analysis
DISH NETWORK CP (DISH): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
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