Sprint to buy Clearwire after offering $2.2 billion
Third-largest carrier will increase coverage.
NEW YORK — Sprint, the country’s third-largest cellphone company, said Monday that it will buy out the portion of wireless network operator Clearwire that it doesn’t already own after raising its offer price to $2.2 billion.
The deal would give Sprint control of a flailing affiliate, one it depends upon to provide high-speed “Sprint 4G” data services on some of its phones. It would increase Sprint’s access to the airwaves, meaning it could boost data speeds in coming years. However, cell towers using Clearwire spectrum have poor range, making it difficult to provide broad coverage.
Sprint Nextel Corp. said it will pay $2.97 per share for the nearly 50 percent stake in Clearwire stock it doesn’t already own. A board committee that excluded Sprint appointees approved the offer. The board hadn’t approved Sprint’s earlier offer of $2.90 per share, or a total of $2.1 billion, which had been made Thursday.
The agreement is a disappointment for Clearwire shareholders, who were hoping that
the company would hold out for an even better offer.
The stock fell 42 cents, or 13 percent, to $2.94 in afternoon trading Monday.
A majority of Clearwire’s minority shareholders need to approve the deal. Of those, cable companies Comcast Corp. and Bright House Networks, as well as chipmaker Intel Corp. have agreed to vote in favor. They control 13 percent of the shares.
Analyst Christopher King at Stifel Nicolaus said it’s likely other shareholders will oppose the deal, arguing that Clearwire is worth much more. That means that final approval “may come down to a vote-counting exercise,” he said.
On a conference call, Clearwire CEO Erik Prusch defended the deal, saying that since Sprint was not interested in selling its stake to another company, it was the only possible buyer. Without a deal, the company may have had to give its debtholders control, wiping out the shareholders, he said.
Clearwire Corp., which is based in Kirkland, Wash., was formed by cellular pioneer Craig McCaw to take advantage of an emerging wireless technology, WiMax, which promised higher speeds and lower costs than conventional cellular technology.
Sprint was working on the same technology. In 2008, it rolled those operations into Clearwire, gaining a stake of more than 50 percent.