Clearwire Corp.'s (CLWR) board recommended that investors sell
their shares to Dish Network Corp. (DISH), in a move that shuns an
earlier takeover agreement with majority owner Sprint Nextel Corp.
(S).
The endorsement of Dish's $4.40-a-share offer puts the pressure
on Sprint, which has seen its effort to buy the remaining half of
Clearwire repeatedly disrupted by Dish. In supporting the Dish
offer, the Clearwire board also recommended shareholders vote
against the Sprint deal.
A shareholder vote on the Sprint deal scheduled for Thursday has
been postponed--now for the third time--until June 24.
A Sprint spokesman said the company is evaluating Clearwire's
statement and will review "any corresponding filings" before
determining its next steps. Given Sprint's stake, Dish is seeking
to become a major minority shareholder in Clearwire.
The struggle for control of Clearwire is likely to continue,
despite the mobile broadband provider endorsing the Dish deal.
Sprint and Dish have clashed over whether Clearwire can grant
certain governance rights to Dish as part of its tender offer.
Sprint suggested Wednesday that it was ready for a fight.
"Sprint continues to have every intention of enforcing its
governance rights," the spokesman said in an emailed statement.
"All commercial agreements, including network and customer
agreements, will be honored and enforced as it regards our ongoing
relationship with Clearwire."
Clearwire had initially agreed to sell its remaining shares to
Sprint for $2.97 a share in December, but Dish came with a higher
bid the next month for $3.30. Sprint raised its offer to $3.40 a
share last month in the face of opposition from numerous Clearwire
shareholders, but Dish launched a tender offer for $4.40 a share in
late May.
The action by the Clearwire committee comes days after Sprint
itself agreed to a higher buyout price from Japan's SoftBank Corp.
(9984.TO), cutting off deal talks with Dish and giving Dish until
June 18 to make its best and final offer for Sprint.
The arguments between Dish and Sprint over the Clearwire tender
offer relate to the interpretation of Clearwire's complicated
governance structure, along with the corporate law of Delaware, the
home of Clearwire's incorporation.
Sprint has said Dish's offer is "not actionable" and that
certain governance rights requested by Dish can't be legally handed
over without consent of Sprint and some other shareholders. Dish
has given a point-by-point rebuttal to Sprint's arguments and urged
Clearwire's board to "correct the record."
Sprint has asserted its rights in its relationship with
Clearwire and casts Dish as attempting to remove those protections.
Sprint says rules put in place in a 2008 restructuring of Clearwire
prevent Dish's requests from being workable.
Clearwire, founded in 2003 by cellular pioneer Craig McCaw, was
restructured in 2008 through a combination of certain Sprint
operations and $3.2 billion in cash from Sprint and other
partners.
Dish argues that its tender offer is consistent with the rights
of Sprint and that Sprint doesn't need to forfeit any rights.
As part of its proposal, Dish wants at least a 25% stake, along
with governance rights and seats on the company's board.
Sprint already owns about half of Clearwire, but Clearwire's
complicated governance structure has made for a sometimes difficult
relationship between the two companies over decisions on how to
best operate the smaller company.
Despite its holdings, Sprint still needs a majority of the
minority holders to approve a takeover of Clearwire.
Anton Troianovski contributed to this article.
Write to Thomas Gryta at thomas.gryta@dowjones.com
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