A customer enters a Sprint store in Chicago.M. Spencer Green/The Associated Press
Sprint Nextel Corp. is offering $2.1-billion to buy the rest of Clearwire Corp. to get full ownership of its wireless spectrum, ending years of speculation about its holding in the wireless Internet provider.
Clearwire shares jumped 11 per cent premarket to $3.06, topping Sprint's $2.90 offer price and suggesting minority shareholders were hoping for a higher bid. Sprint shares were down marginally.
Sprint owns nearly 52 per cent of Clearwire and the bid for the rest values it at around $4.2-billion.
Cash-strapped Clearwire, which has struggled to expand its network and turn a profit, has long been seen by analysts as an acquisition target for Sprint.
A planned purchase of 70 per cent of Sprint by Japanese mobile firm Softbank, with an associated capital infusion, may have helped Sprint to finally buy the rest of Clearwire.
But some minority Clearwire shareholders – including No.2 shareholder Mount Kellet Capital Management LP and Crest Financial Limited – have expressed concerns over a deal with Sprint, suggesting that Clearwire should look at other options.
Between them, the two investment firms own nearly 15 per cent of Clearwire and Sprint needs the approval of minority shareholders to proceed.
On Tuesday, Crest Financial filed a lawsuit against the company and Sprint to try to thwart a deal.
Clearwire's other minority shareholders include Intel Corp. and Comcast Corp. who own around 12.4 per cent between them.
The proposed offer price represents a 5 per cent premium to Clearwire's closing stock price on Wednesday, but is 20 per cent higher than the closing price on December 10, the day before news of a possible bid leaked.
Sprint, which is also Clearwire's biggest wholesale customer, had a 51.7-per-cent stake in Clearwire as of Dec. 11, up from the 50.8 per cent on Oct. 13.
The offer also needs the approval of Japanese mobile company Softbank Corp. and is contingent on the planned sale of 70 per cent of Sprint to Softbank, Sprint said in the regulatory filing.
The offer, which Sprint said it would finance from working capital, is being evaluated by a special committee of Clearwire's board.