Clearwire appeared to move step closer in its pending acquisition by Sprint Nextel, with Institutional Shareholder Services throwing its support behind Sprint Nextel’s recently revised offer to acquire the remaining stake in Clearwire for $5 per share.
“Given the cash consideration being offered by Sprint is higher than the tender offer from Dish, and therefore the best alternative currently available to maximize value, shareholders should vote ‘for’ the proposed merger with Sprint,’ ISS noted in its June 21 report.
Sprint Nextel last week increased its offer price to acquire the remaining stake in Clearwire it did not already own from $3.40 per share to $5 per share. The increased bid surpassed the pending offer by Dish Network, which had proposed acquiring at least a 25% stake in Clearwire for $4.40 per share, and was a 68% increase over Sprint Nextel’s original offer of $2.97 per share.
In addition to the price-per-share increase, Sprint Nextel’s new offer includes a clause that will require Clearwire to pay a $115 million termination fee, or 3% of the equity value of the minority stake should the deal now fall apart.
The bolstered offer from Sprint Nextel also convinced Clearwire’s “special committee” to switch alliances in throwing its support behind the Sprint Nextel offer.
“We are pleased that ISS agrees that Sprint’s increased offer to acquire all of the outstanding shares of Clearwire represents the best value to our stockholders,” said Erik Prusch, president and CEO of Clearwire. “This offer has been unanimously recommended by the special committee of Clearwire’s board of directors, which consists of independent, non-Sprint-affiliated directors, and the board urges Clearwire stockholders to vote ‘for’ the transaction.”
Clearwire is set to convene a vote on July 8 from its shareholder regarding the proposed transaction.
Dish Network has so far not responded to the latest offer from Sprint Nextel, though it does have a history of throwing out new bids just prior to a scheduled shareholder vote.
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