Sprint Nextel Corp is set to assume the driver’s seat of Clearwire Corporation after sweetening the deal with a USD $2.2 billion offer to pick up the outstanding 49% equity stake in the US mobile telcom and broadband business that it doesn’t already hold stock in.
Sprint upping their offer to USD $2.97 a share from the initial bid of $2.90 got the nod from Clearwire (NASDAQ:CLWR) for a deal valued at USD $2.2 billion. This deal did however leave some shareholders less than pleased who seemed to believe that the deal should have come in at as much as USD $7 billion.
The deal gives Sprint(NYSE:S) access to Clearwire’s substantial and diverse holdings and has been approved by Clearwire’s board as well as Japan’s SoftBank, which in October agreed to buy 70% of Sprint for approximately USD $20 billion.
In a news release the Japanese company said, “Softbank is supportive of the merger agreement announced today by Sprint (NYSE:S) and Clearwire, and believes that, when completed, the proposed transaction will better position both Sprint (NYSE:S) and Clearwire (NASDAQ:CLWR) to bring greater competition and enhanced mobile services to American consumers.”
The deal will bolster the third largest telecom groups by subscribers in the US market and enable it to compete more effectively with Verizon Wireless, AT&T and Deutsche Telekom”s T-Mobile USA unit.
Competition is fierce for US mobile operators competing to provide next generation 4G mobile broadband services that smartphone and tablet users require. Clearwire’s diverse technology and infrastructure holding will enable Sprint (NYSE:S) to build an expanded 4G network with LTE-based technology resulting in higher network performance and capacity.
The Clearwire and Sprint (NYSE:S) dealing also account for agreements totaling some USD $800m of additional financing for Clearwire (NASDAQ:CLWR) in the form of options which can be conditionally exchanged for Clearwire common stock at USD $1.50 per share.
Clearwire chief executive Erik Prusch said: “Our board of directors has been reviewing available strategic alternatives over the course of the last two years. . . [This] is the best path forward.”
Stock Price Performance: (30-Day) Between November 16, 2012 and December 17, 2012, Sprint Nextel Corp (NYSE:S) stock price increased USD $0.08 (+1.45%) from USD $5.48 to $5.56. Clearwire Corporation (NASDAQ:CLWR) stock price increased USD $0.72 (+32.87%) from USD $2.19 to $2.91.