The bidding war between Dish Network (DISH) and SoftBank for Sprint (S) appears to be over. Following the raised bid of $21.6 billion by SoftBank last week, and Sprint suing both Dish and Clearwire for getting in the way of its merger deal with Softbank, Dish has withdrawn its offer. Dish will now focus on acquiring a large minority stake in Clearwire. With Sprint out of picture, Dish will still continue to look for strategic partners in the wireless industry or build its own network.
Dish Withdraws Its Offer for Sprint
Dish said it will not submit a new offer for Sprint as it was almost impractical for it to meet the Tuesday, June 25, deadline, given Sprint's decision to prematurely terminate the due diligence process. This move appears to clear the way for SoftBank to acquire Sprint and gain a foothold in the rapidly changing U.S. wireless industry. Given the saturation in the Japanese wireless market, Softbank has been eyeing the U.S. market, which is seen to be offering more opportunities. While Dish can still submit a new bid after June 25, under the terms of the revised SoftBank offer, Sprint can no longer terminate SoftBank's offer.
Dish will also move forward with its ambitions in the U.S. wireless industry where it envisions providing bundled services of video, high-speed Internet, and voice. The company will continue to seek partners and form joint ventures, bid for another player in the industry, or start its own network. Dish already owns a pool of spectrum and has also bid for Lightsquared spectrum recently. (See also "Dish Eyes More Spectrum With LightSquared Bid.") Spectrum is a very valuable asset in the growing wireless industry. While Sprint may be out of the picture, the wireless story remains intact for Dish.
All Eyes on Clearwire
When it comes to Sprint, it may be happy with Dish's recent move at one end, but it leaves the hurdle for it to acquire rest of the 49% stake in Clearwire. Dish is currently competing with Sprint to buy Clearwire, in which Sprint holds a controlling stake and wants to own 100% of it. Dish late last month upped its offer for Clearwire to $4.40 a share, which tops Sprint's offer of $3.40 a share.
Earlier this week, Sprint filed a lawsuit against Dish to try to block its tender offer for Clearwire. Dish said the lawsuit was a diversion by Sprint. Clearwire provides mobile and fixed wireless broadband communications services to retail and wholesale customers in Belgium, Spain, and the U.S. It provides services to 88 markets in the U.S., covering 134 million potential subscribers. It owns rights to radio frequency spectrum in the 2.5 GHz range and provides service primarily using the 4G 802.16e mobile WiMAX standard.
Clearwire's spectrum is largely under-exploited, which makes it a potential target by many operators. Apart from Dish and Sprint, Verizon (VZ) is also interested in the airwaves owned by Clearwire. Interestingly, in the midst of this bidding war, Clearwire's stock price has moved from $1.8 last year to $4.6 as of yesterday. If Dish succeeds in acquiring a large minority stake, it will get certain governance rights and seats on the board of Clearwire. All eyes will now be on the Clearwire's shareholders vote to decide on Dish's bid due on June 24.
Disclosure: No positions.