Dish Network (
) raised its buyout offer for Clearwire to $4.40 per
share, valuing the wireless service provider at $6.5 billion.
Earlier last week, Sprint (
) had raised its bid to $3.40 per share. Sprint already owns a
majority of Clearwire and wants to acquire an additional 49% stake.
Earlier this week, Sprint-Softbank merger deal received national
security clearance. (
Sprint-Softbank Deal Receives National Security
Clearance Ahead Of Shareholder Vote
, Trefis, May 29, 2013) Softbank is also interested in the valuable
spectrum of Clearwire and has made an offer to acquire Sprint.
Dish's new offer for Clearwire, which is 30% higher than that of
Sprint, highlights the satellite service provider's
urge for entering into the wireless arena. In light of Dish's new
offer, it will be interesting to see how
this story unfolds as Clearwire shareholders vote on
Sprint's offer this Friday.
See our complete analysis for Dish Network
Dish And Clearwire
Dish has a handful of reasons for such aggressive bids it has made
recently into the wireless arena. The company has been acquiring
spectrum for some time now, and it needs a wireless carrier that
can bring that pool of valuable assets to use. Moreover, the
company faces a Federal Communications Commission (FCC) deadline to
buy or build a cellular network. That's why the company has been
chasing Sprint, which could offer a ready to use infrastructure
instead of spending billions of dollars and lot of time on building
its own network. Finally, the U.S. pay-TV market is saturated and
Dish sees growth in wireless and bundling options.
Dish said that it is looking to buy all of Clearwire's
outstanding shares. However, it would accept a deal for anything
above 25% of the total stock. The company also wants to designate
at least three seats on Clearwire's board and additional seats if
it acquires a bigger stake. Clearwire on the other hand is facing a
cash crunch and needs at least $1.7 billion to keep operating. This
is one the primary reasons why it has been in an urgency to
complete a deal. In order to fund Clearwire operations, Dish said
it would provide financing of $80 million a month, a structure
similar to what was offered by Sprint.
Clearwire owns valuable and underexploited spectrum, which could
potentially offer strong growth in the future for either of the
investors. The bidding war may not be over yet and Sprint may top
Dish's bid. Meanwhile, Dish has yet again made it difficult for
Softbank to acquire Sprint. All eyes will now be on May 31, when
Clearwire's shareholders vote on Sprint's offer.
Our price estimate for Dish Network stands at
, roughly in line with the market price.
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