Exclusive: Softbank caps Sprint's Clearwire bid; investors want more

Thu Dec 13, 2012 10:34pm EST
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By Nadia Damouni and Sinead Carew

NEW YORK (Reuters) - Sprint Nextel Corp's $2.1 billion offer to buy out Clearwire Corp appeared to be running into trouble on Thursday, as some shareholders said they wanted more money while Softbank Corp set a cap on how much Sprint could pay.

Sprint, which owns 50.45 percent of Clearwire, offered $2.90 per share for the rest of the company and said it would also provide interim financing of $800 million to the cash-strapped company. Any deal would need approval by Softbank, which has agreed to buy 70 percent of Sprint for about $20 billion.

Clearwire shareholders, who together hold about 7.6 percent of the company, criticized the Sprint offer on Thursday, with some saying that the No. 3 U.S. wireless carrier should raise its bid to at least $5 per share. Holders of at least 24.8 percent of Clearwire's outstanding stock, other than Sprint, need to approve the deal.

Clearwire, which is reviewing the Sprint offer, saw its shares jump almost 15 percent on Thursday to $3.16, suggesting investors expected a higher price.

But Softbank has told Sprint that it would not consent to any Clearwire bid higher than $2.97 per share, two sources close to the matter said. The threshold is the same price that Sprint recently paid to buy a small stake from Clearwire founder Craig McCaw's Eagle River Holdings LLC.

Sprint, Clearwire and Softbank declined to comment on the details of these discussions.

For Clearwire, the deal is one of the few options it might have to survive in the long term. The company needs to raise more financing to upgrade its network and to keep the business afloat. It has said that it has enough money to last it until the third quarter.

Stabilizing Clearwire is also in Sprint's interest, which not only has a majority ownership of the company. The hurdles Sprint is running into highlight the complexities it faces in trying to take on its larger rivals, Verizon Wireless and AT&T Inc. A deal would also bolster Sprint's network and give the carrier full control of Clearwire's substantial spectrum.   Continued...

A jogger runs past a Softbank shop in Tokyo October 16, 2012. Softbank Corp's pricey $20 billion (12 billion pounds) bid to buy control of No. 3 U.S. telecoms company Sprint Nextel Corp marks a bold move by billionaire CEO Masayoshi Son beyond his flagging home market. To match Analysis SPRINT-SOFTBANK/LANDSCAPE REUTERS/Kim Kyung-Hoon