Sprint to acquire 100 per cent ownership of Clearwire for USD2.97 per share
Sprint is to acquire the approximately 50 per cent stake in Clearwire it does not currently own for USD2.97 per share, equating to a total payment to Clearwire shareholders, other than Sprint, of USD2.2bn.
This transaction results in a total Clearwire enterprise value of approximately USD10bn, including net debt and spectrum lease obligations of USD5.5bn.
The transaction consideration represents a 128 per cent premium to Clearwire's closing share price the day before the Sprint-Softbank discussions were first confirmed in the marketplace on 11 October, with Clearwire speculated to be a part of that transaction; and a 40 per cent premium to the closing price the day before receipt of Sprint’s initial USD2.60 per share non-binding indication of interest on 21 November.
Clearwire’s spectrum, when combined with Sprint’s, will provide Sprint with an enhanced spectrum portfolio that will strengthen its position and increase competitiveness in the US wireless industry. Sprint’s Network Vision architecture should allow for better alignment and the full utilisation and integration of Clearwire’s complementary 2.5 GHz spectrum assets, while achieving operational efficiencies and improved service for customers as the spectrum and network is migrated to LTE standards.
Sprint chief executive Dan Hesse says: “Today’s transaction marks yet another significant step in Sprint’s improved competitive position and ability to offer customers better products, more choices and better services. Sprint is uniquely positioned to maximise the value of Clearwire’s spectrum and efficiently deploy it to increase Sprint’s network capacity. We believe this transaction, particularly when leveraged with our SoftBank relationship, is further validation of our strategy and allows Sprint to control its network destiny.”
The transaction was unanimously approved by Clearwire’s board of directors upon the unanimous recommendation of a special committee of the Clearwire board consisting of disinterested directors not appointed by Sprint. In addition, Clearwire has received commitments from Comcast, Intel and Bright House Networks, who collectively own approximately 13 per cent of Clearwire’s voting shares, to vote their shares in support of the transaction. SoftBank has provided its consent to the transaction, as required under the terms of its recently announced merger agreement with Sprint.
In connection with the transaction, Clearwire and Sprint have entered into agreements that provide up to USD800m of additional financing for Clearwire in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire common stock at USD1.50 per share, subject to adjustment under certain conditions. Under the financing agreements, Sprint has agreed to purchase USD80m of exchangeable notes per month for up to ten months beginning in January 2013, with some of the monthly purchases subject to certain funding conditions, including conditions relating to the approval of the proposed merger by Clearwire’s shareholders and a network build out plan.
The transaction is subject to customary closing conditions, including regulatory approvals and the approval of Clearwire’s stockholders, including the approval of a majority of Clearwire stockholders not affiliated with Sprint or SoftBank. The closing of the transaction is also contingent on the consummation of Sprint’s previously announced transaction with SoftBank. The Clearwire and SoftBank transactions are expected to close mid-2013.
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