The joint venture between

Sprint Nextel

(S) - Get Report

and

Clearwire

(CLWR)

has cleared all regulatory hurdles and should close before the end of the year, giving investors an opportunity to profit from an arbitrage play.

With five strategic investors, including

Google

(GOOG) - Get Report

and

Intel

(INTC) - Get Report

, set to pay a high premium for shares of Clearwire thanks to an agreement finalized six months earlier, shares of the high speed wireless Internet company could see a bounce after the deal closes.

Sprint and Clearwire struck the $14.5-million agreement in May, a deal that will combine their wireless broadband businesses in a new company named Clearwire. The company will deploy the first nationwide mobile WiMax network, considered a fourth-generation wireless technology that features fast data transfers over long distances

Sprint will contribute all of its 2.5-gigahertz spectrum and its Xohm-branded WiMax assets into the new Clearwire, a contribution worth approximately $7.4 billion.

Comcast

(CMCSA) - Get Report

will invest $1.05 billion, Intel will invest $1 billion (in addition to its previous investments made in Clearwire),

Time Warner Cable

(TWC)

will invest $550 million, Google will invest $500 million and Bright House Networks will invest $100 million.

Sprint will own about 51% of the equity. Existing Clearwire shareholders will own about 27%, and the investor group will be acquiring roughly 22%.

When the agreement was made, the five investing companies said they would pay a target price of $20 a share for Clearwire's stock, although that figure is subject to a post-closing adjustment. The companies said the adjustment will be based upon the trading price of new Clearwire common stock over 15 randomly selected trading days during the 30-trading day period ending on the 90th day after the closing date.

Additionally, the price per share will be based upon the volume weighted average price over those 15 days and, perhaps more importantly, is subject to a cap of $23 and a floor of $17.

When the deal was announced, Clearwire traded just north of $16, making the scenario of paying the floor price still palatable for the five investors. But Clearwire is now at $9.15, a decline of 44% over the last six months. If the five companies were to pay the minimum price of $17 for Clearwire shares now, that would represent an 85% premium for the company.

"It has traded

way

outside of the collar," says Craig Moffett, senior analyst with Sanford Bernstein. "But by all indications, they all plan to honor their funding commitments. Ironically, they may actually be obligated to write down the value of their investment as soon as the investment is made."

Moffett adds that while the investment isn't immaterial to Google, Intel or the other investors, all of these companies have indicated they continue to view the Clearwire deal as a strong investment. In the event all five pay the hefty premium for the Clearwire shares, it creates the potential for a small rally in Clearwire's stock.

Both the

Federal Communications Commission

and the Department of Justice have now deemed the

Sprint/Clearwire

deal as anticompetitive. A spokesperson for Sprint said Clearwire shareholders are now set to vote on the deal on Nov. 20, with expectations for the deal to close in the fourth quarter.

Investors may get more clarity on the Clearwire deal from Sprint directly when the company reports its third-quarter results on Friday. In addition, many are hoping for more comments on Sprint's decision to "retain and rejuvenate" the Nextel business.

Sprint said last week it doesn't plan to divest itself of the struggling unit it acquired in 2005 for $35 billion, despite reports it was

shopping the unit

to potential buyers.

Shares of Sprint were lately down 8% to $3.82 and have now fallen 71% in 2008.