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TheDeal: Sprint Nextel Raises Clearwire Bid

NEW YORK ( TheStreet) -- Apparently, $3.40 per share was not Sprint Nextel's (S) "best and final offer" for shares of Clearwire (CLWR) that it does not own.

Sprint came forward Thursday with a bid of $5 per share, or about $3.9 billion, for the minority shares. A month ago, the carrier said that $3.40 was the most it would pay for nearly 50% of Clearwire's equity. That was before satellite TV company Dish Network (DISH - Get Report) came forward with a bid of $4.40 per share in late May.

Shares of Clearwire rose 34.5 cents, or 7.3%, to $5.04 on Thursday afternoon, with some investors perhaps expecting that Charlie Ergen's Dish will come forward with another offer.

Clearwire's board changed its recommendation on Thursday, advising shareholders to accept the offer from Sprint and reject Dish's bid. The company also pushed a special meeting of shareholders from June 24 to July 8.

Ergen has a number of options. The satellite mogul recently withdrew a $25.5 billion offer for a majority position in Sprint, challenging a bid from Softbank. Ergen could renew his pursuit of Sprint.

T-Mobile USA (TMUS) would be another option. Shares of T-Mobile rose 73 cents, or about 3.3%, to $22.96, on Thursday.

Ergen has also made a $2 billion cash offer for assets of a unit of LightSquared through a vehicle called L-Band Acquisition, according to bankruptcy pleadings.

Sprint, led by CEO Dan Hesse, holds just more than 50% of Clearwire. The Overland Park, Kan., telecom said that its latest bid values all of Clearwire, including debt and shares that it already owns, at more than $14 billion, or 30 cents per megahertz per person covered by its licenses.

Even though it indicated in May that it would not raise its bid, it would have been difficult for the telecom and backer Softbank to walk away.

Clearwire operates on the same 2.5 GHz spectrum that Softbank uses to deploy wireless broadband service in Japan. Softbank chairman and CEO Masayoshi Son has stated that Clearwire and its portfolio of spectrum licenses are a large part of the Sprint deal's appeal.

"We believe Clearwire shareholders will approve the $5 offer from Sprint regardless of any new overtures from Dish," Walt Piecyk of BTIG LLC wrote in a Thursday note. "Ergen could turn his attentions to Sprint ahead of that shareholder vote next week but it will be challenging given the need to convince a more diverse Sprint investor base."

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