Sprint announced a definitive agreement to acquire the approximately 50 percent in Clearwire it does not yet own for USD 2.2 billion. The company will pay USD 2.97 per share, giving Clearwire an enterprise value of approximately USD 10 billion including net debt and spectrum lease obligations of USD 5.5 billion.
This is a 128 percent premium to Clearwire's share price the day before Sprint first confirmed it was in talks to be acquired by Japanese operator Softbank and a 40 percent premium on the price the day before Sprint first indicated interest in the buy-out of Clearwire.
Sprint said the deal will boost its spectrum resources, with full integration of Clearwire's frequencies in the 2.5GHz band in its network expansion plans. The takeover should also lead to operational efficiencies and improved service for customers as the spectrum and network are migrated to LTE.
Clearwire’s board has approved the offer, after a unanimous recommendation from a special committee of disinterested directors not appointed by Sprint. Clearwire's other major shareholders, Comcast, Intel and Bright House Networks, which collectively own 13 percent of Clearwire’s voting shares, have agreed to support the Sprint bid, and Softbank has provided its consent to the transaction.
Clearwire said it had been considering strategic options for two years, and the Sprint merger appeared the best direction. Sprint has also agreed to provide up to USD 800 million of additional financing for Clearwire in the form of notes exchangeable to Clearwire shares at a price of USD 1.50 per share. This will involve Sprint buying USD 80 million of notes per month for up to ten months from January, conditional on the approval of the merger by Clearwire’s shareholders and a network build-out plan.
The acquisition is conditional on shareholder and regulatory approvals, as well as the completion of Softbank's takeover of Sprint. Both acquisitions are expected to close by mid-2013.
