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TheStreet Open House

Sprint Takeover Drama Is Far From Over

But wait. There's More behind Door Number Two

Sprint's proposed takeover of Clearwire may follow a similar cycle of news and decisions with about a week left until a crucial shareholder vote.

Clearwire's largest remaining investors, including Crest Financial and Mount Kellett Management, do not support Sprint's $3.30 a share offer for the company's remaining shares.

Meanwhile, Sprint and Dish Network are engaged in a legal back-and-forth on whether a $4.40 a share competing offer is even valid.

Currently, Sprint and Dish are arguing over whether a prospective minority holder can have the influence to reconstitute Clearwire's board given Sprint's majority control and agreements put in place for equity holders when the company was created.

Dish's tender offer is "not actionable" because it assumes certain governance changes that are not possible given Clearwire's agreement with its initial equity holders, Sprint said earlier in June.

"It defies logic that Sprint could credibly assert that it is illegal for Clearwire to agree to customary minority protection rights in favor of a significant stockholder such as DISH will be (by definition holding in excess of 25% of the Clearwire shares) while claiming that a 6% stockholder such as Comcast is entitled to block minority stockholders from accepting DISH's superior offer," Dish retorted in a press release Wednesday.

John Hodulik, a telecom analyst at UBS, has pointed out that although Dish's offer is higher than Sprint's, it depends on a change in Clearwire's governance structure under its equity holder agreement. "It remains unclear whether Clearwire would be able to grant such rights without Sprint's agreement," Hodulik wrote in a late May client note.

Clearwire was formed in 2008 through its merger with Sprint's 2.5 GHz spectrum assets and $3.2 billion in investor capital provided by Sprint, Comcast (CMSA) and Intel (INTC), among others.

The company's board currently recommends shareholders support Sprint's takeover, however, a special committee has yet to comment on Dish's tender offer.

"Our Board and Special Committee are continuing their independent review of DISH Network's offer to determine the best course of action for the Company and all of its stockholders," Susan Johnston, a Clearwire spokesperson said in an e-mailed statement June 3.

"The Special Committee has not made any determination to change its recommendation of the current Sprint transaction, and we will have no further comment until they have finished their full review."

Proxy advisor ISS supports Sprint's $3.40 a share offer for Clearwire's remaining shares, while Glass Lewis recommends shareholders vote against the deal.

Clearwire says Glass Lewis' recommendation suffered from "superficial analysis, contained numerous inaccuracies, and grossly underestimates the economic realities facing the Company."

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