Sprint Nextel Corp.
) is reportedly financing
) under its buyout deal. Sprint will provide another $80 million
to Cleawire in May, leaving lesser scope for
Dish Network Corp.
) takeover plan to be fulfilled despite its being a lucrative
In Dec 2012, Sprint inked an agreement to acquire the remaining
50% stake in Clearwire Corporation for $2.97 per share, amounting
to a total of approximately $2.2 billion. In addition, the
company also offered Clearwire a financing arrangement of $800
million that can be drawn in installments.
In January and February, Clearwire declined to receive any sum
under the financing arrangement as the company was planning to
consider Dish Network Corp.'s (DISH) buyout proposal of $2.28
billion. However, Clearwire moved ahead with Sprint's deal and
sort financing in March and April. After the company drew funds
from Sprint in April, news surfaced that Dish is planning a
possible withdrawal of its acquisition proposal if Clearwire
takes additional funding from Sprint, as this would give Sprint
the opportunity to increase its holding with every financing
installment. However, nothing has been apparently confirmed
by Dish regarding its withdrawal of the proposal.
Going forward, in the middle of this month, Dish came up with
another plan of buying Sprint. Dish's offer of $25.5 billion to
acquire Sprint has apparently outbid Softbank offer to acquire
70% of Sprint's stake for a total consideration of $20.1 billion.
Going by recent reports, Sprint is currently reviewing Dish's
offer and has received an approval to seek more details on it
The buyout has created interest, with speculations mounting on
which company will finally be able to cut the deal. While Sprint
has increased its chances by financing Cleawire, Dish's counter
offer to buyout Sprint for $7 per share (inclusive of $4.76 in
cash and 0.05953 shares in Dish for each Sprint share) is a
challenge for Softbank.
However, Softbank seems fully geared for this challenge. The
company has already hedged the falling yen against the U.S.
dollar SoftBank hedged its Japanese currency at $1 = 82.2 yen.
Moreover, Japanese banks are ready to lend at the lowest possible
rate, thereby helping SoftBank to raise more debt for buying out
Sprint, which competes with the likes of
Verizon Communications Inc.
), has a Zacks Rank #3, implying a short-term (1-3 months) Buy
CLEARWIRE CORP (CLWR): Free Stock Analysis
DISH NETWORK CP (DISH): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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