NEW YORK (Reuters) - Crest Financial, one of the biggest minority shareholders in Clearwire Corp, on Thursday urged the wireless company to recommend against Sprint Nextel Corp’s buyout offer after Dish Network Corp made a counter bid.
Crest, which holds about 8 percent of Clearwire shares, said Clearwire should open itself to competitive bidding, and said even though Dish’s bid appears superior it may still prove inadequate to shareholders.
Clearwire is expected to postpone its shareholder vote on Sprint’s $3.40 per share offer after Dish’s counter bid of $4.40 per share, according to two sources familiar with the situation who asked not to be named.
Clearwire said its board would review the latest offer, but has not confirmed if it will adjourn the shareholders meeting.
The new offer further muddies the waters in what was already a complicated consolidation scenario in which Dish Chairman Charlie Ergen is competing against Japan’s SoftBank Corp to buy Sprint, the No. 3 U.S. mobile service provider.
Sprint is the majority owner of Clearwire.
Some analysts speculated as to whether the Clearwire bid meant Dish would be happy with an investment in the smaller company or a spectrum purchase from Clearwire.
Dish said it was not backing down from its bid for Sprint. “Our Clearwire offer in no way diminishes our interest or vision for a combined Dish/Sprint,” a Dish spokesman said.
On the same day that Dish made the bid for Clearwire, Ergen and other Dish executives involved in the Sprint bid were holding meetings at Sprint’s Overland Park, Kansas, campus as part of the due diligence process for that offer, according to a source familiar with the matter.
Whatever Dish’s motivation for the Clearwire bid, analysts said it spells trouble for SoftBank founder Masayoshi Son and his efforts to gain approval for Softbank’s $20.1 billion bid for Sprint at a shareholder vote on June 12.
Softbank had approved Sprint’s bid to buy Clearwire.
BTIG telecom analyst Walter Piecyk said SoftBank should come up with a higher bid for Sprint soon, as Dish’s Clearwire bid effectively reduces the value of Softbank’s bid for Sprint.
“If Masa doesn’t figure out how to regain control of the Clearwire process he may have a much harder time convincing Sprint shareholders that his Sprint offer is superior to Ergen’s,” Piecyk said.
SoftBank gained clearance to go ahead with its Sprint offer earlier this week from a key U.S. government committee but needs more regulatory approvals.
Dish, which had tried to buy Clearwire in January, appeared to strengthen its case with Clearwire’s board by excluding conditions from the new bid that had made it very difficult for Clearwire to accept the previous offer.
Clearwire had said it could not act on a January offer from Dish for $3.30 per share because some of the bid conditions went against previous agreements that Clearwire had with Sprint.
Since Dish removed some of the conditions in its new bid, the source said Ergen appeared to have “made a serious offer that is actionable” and that the board and its special committee will have to review the proposal carefully.
“This is a much improved offer from Dish, not just the dollar amount,” said the source. “He’s got himself in the game now.”
A money manager at one big Clearwire shareholder sounded happy with the latest offer from Dish on Thursday even as the person declined to comment specifically on the price.
Five months ago, when Dish made its first bid for Clearwire, “I don’t think anybody on the special committee would have thought that we would be where we are today,” the money manager said. “That’s largely because of the resolve of Clearwire independent shareholders.”
Clearwire shares rose 26 percent to $4.40 on Thursday after Ergen started advertising his tender offer to Clearwire shareholders.
Any purchase of Clearwire would need approval from more than 50 percent of Clearwire’s majority shareholders.
Before the latest Dish offer, many shareholders had said they were unhappy with Sprint’s bid for Clearwire - even after it recently raised the price to $3.40 per share from $2.97 per share. Crest Financial has been leading a proxy battle against the deal.
Reporting by Sinead Carew; Editing by Jeffrey Benkoe and Leslie Adler