Sprint to buy Clear­wire af­ter of­fer­ing $2.2 bil­lion

Third-largest car­rier will in­crease cov­er­age.

Austin American-Statesman - - BUSINESS - Con­tin­ued from B

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.

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