Analysis: Sprint should raise Clearwire bid to avoid Dish tension

Wed Jun 19, 2013 7:18pm EDT
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By Sinead Carew and Liana B. Baker

NEW YORK (Reuters) - Sprint Nextel Corp should consider raising its offer price for Clearwire Corp or risk being saddled with a contentious relationship with Dish Network Corp, controlled by feisty billionaire Charlie Ergen.

Shareholders of Clearwire, already majority owned by Sprint, will vote on June 24 on Sprint's $3.40-a-share offer to buy the rest of the company. But Clearwire's board has recommended shareholders instead accept a higher, $4.40-a-share tender offer from Dish.

If Dish's offer carries the day, Sprint would have some kind of relationship with Dish, whether the satellite service provider becomes a minority Clearwire shareholder or the two agree to a network partnership. Either way, such an arrangement could be fraught with difficulty for Sprint, analysts say.

"It would be a cultural shock for any company to be partnered with Dish or to have any operating arrangement with it," said Brean Capital analyst Todd Mitchell, who pointed to a string of Dish relationships that went sour or ended in court.

Both Dish and Sprint, which has itself agreed to be bought by SoftBank Corp, want access to a trove of wireless airwave rights that Clearwire owns. SoftBank has also said that it is important for Sprint to acquire the Clearwire spectrum.

But several Clearwire shareholders have already said they are unhappy with Sprint's offer. Taran Asset Management principal Chris Gleason said he would not vote for Sprint's offer and that the vote would certainly fail on Monday.

Gleason, whose firm holds about 1 million Clearwire shares, suggested that Sprint had two options. "You've got to do a significantly higher bid or come to a deal with Charlie this week," Gleason said, referring to Ergen.

Analysts also expect Sprint to suffer a defeat at the shareholder meeting unless it raises its offer.   Continued...

Pedestrians walk past a Sprint store in New York in this December 17, 2012 file photo. REUTERS/Andrew Kelly/Files