Wireless provider Sprint (click ticker for report: ) will acquire Clearwire (click ticker for report: ) for $2.97 per share, pegging the company’s enterprise value at $10 billion. The deal also includes bridge financing of $800 million, and as wtih the SoftBank deal, it is expected to close mid-2013.
Last week, Sprint offered $2.90 per share for the company, and shares spiked to well over $3. We’ve seen several large minority shareholders voice concerns about the relatively low valuation the deal gives the company based on its net asset value, which appears to be a valid concern given the recent deals for spectrum. However, the previous connection (Sprint owns over 50% of Clearwire) between the two companies has put Clearwire shareholders in a tough position, as there was little chance that a fair market value could surface.
We expect to see several shareholder lawsuits against Clearwire’s board of directors, which is sometimes common when controversial mergers occur. In this case, we think shareholders will have a valid claim, which could drag out the process or even prevent the deal from consummating. Still, we remain on the sidelines in this situation.