Sprint Moves To Buy Remaining Shares Of Clearwire
Clearwire Corp. shares shot up 39 cents to $3.13 just before 1 p.m. after majority owner Sprint Nextel Corp. offered $2.1 billion to buy the rest of the wireless provider. The sudden increase in stock price indicates Clearwire shareholders will likely hold out for a higher bid from Sprint, which offered $2.90 a share.
Sprint, however, stated if Clearwire shareholders agree to its initial offer, it will also provide $800 million in interim financing to the financially-struggling company. The purchase would allow Sprintâ€”the No. 3 US mobile service providerâ€”to increase its wireless data services. Analysts say the company is not so cash-strapped that it will accept Sprintâ€™s first offer.
â€śWith a year of liquidity on the books and the alternative of raising additional equity or refinancing debt at this level, Clearwire is hardly without options, and we don’t see why the company would necessarily jump at a the $2.90 bid,â€ť JPMorgan analyst Philip Cusick said in a research note.
Sprint has not said if it will revise its offer, which is 5 percent higher than Clearwireâ€™s Dec. 12 closing price and more than double its market price as of Oct. 10. Spring already holds a 50.4-percent stake in the company, valued at about $4.2 billion. Clearwire has struggled financially as it has attempted to upgrade its network and keep pace with faster mobile Internet speeds, common among larger providers such as AT&T and T-Mobile. Sprint currently uses the Clearwire network to provide â€śSprint4Gâ€ť service, but has been constructing its own 4G network.