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"There's no way" Sprint's (S) attempt to buy Clearwire (CLWR +0.6%) succeeds without a higher...

"There's no way" Sprint's (S) attempt to buy Clearwire (CLWR +0.6%) succeeds without a higher bid, says Taran Asset Management's Chris Gleason, one of many institutional Clearwire investors planning to vote against Sprint's $2.97/share offer at Tuesday's meeting. Reuters has uncovered investors holding 31% of Clearwire's public (non-Sprint-owned) shares who oppose the current deal; Sprint needs a majority of public shares to be voted in favor. Clearwire is trading 10% above Sprint's offer price, and 1% below Dish's $3.30/share offer price. (previous)
Comments (28)
  • Gerard Hallaren, CFA
    , contributor
    Comments (271) | Send Message
     
    I am betting there will be no one for minority shareholders to fight after the vote. Sprint will most likely walk away. Then where is Clearwire?
    17 May 2013, 02:00 PM Reply Like
  • Good Captain
    , contributor
    Comments (456) | Send Message
     
    The problem for dissenters, I believe, is that Sprint will still carry a majority ownership position in the current CLWR even if they fail in their current attempt to acquire the company. Any potential future deal will have to pass w/ Sprint's blessing which may dilute the prospective acquisition's value to the potential acquirer thereby potentially limiting shareholders' upside.
    17 May 2013, 04:51 PM Reply Like
  • milehr
    , contributor
    Comments (499) | Send Message
     
    CLWR bankruptcy will have devastating effect on S, and will likely derail SoftBank deal. So, if the dissenting CLWR shareholders are wiped out, they will take S with them. This is why I believe that S has no choice, but to up its bid for CLWR.
    17 May 2013, 08:58 PM Reply Like
  • AggGrow
    , contributor
    Comments (195) | Send Message
     
    I still don't get why these big hedge funds care? Sprint is undervalued too, and the synergy between the two will unlock value within. I mean, I'm all for a higher price and agree this is a low bid, but really - what's the point?

     

    I read an article in Forbes by some real ding-a-ling. The net of it (I think) was that if CLWR shareholders defeat the Sprint bid, then Verizon will step up and make a bigger one. Now you tell me - is that pretzel logic or what? If Verizon wanted to make a bid, it would have. If Verizon thought Sprint's bid was beat-able, it would have a competing bid in today. Duh!

     

    Fact is, there will be no other higher offers except maybe from the truly desperate, like Dish, which is a sure loss for Sprint shareholders. And there's a sensible reason that this is so. Sprint, Clearwire, Softbank and China Mobile already operate equipment in that spectrum, so it's less costly to deploy and/or move customers. Verizon and AT&T do not and have not. Whether they should is up to them, but the point for us is that the value of >2GHz spectrum is less to everyone except the aforementioned.

     

    That, plus the fact that CLWR shareholders become S shareholders, should mean that no real investor should be disheartened by Sprints lowball bid.

     

    Speculators - maybe! Investors - Not!

     

    I wonder what I'm missing?!
    17 May 2013, 03:07 PM Reply Like
  • milehr
    , contributor
    Comments (499) | Send Message
     
    If CLWR goes into BK, Sprint will lose its 50% stake, and instead of buying the other 50%, will have to buy all 100%, with no guarantee of success. In fact, S will be so weakened by CLWR BK that may not participate in the bidding at all.
    17 May 2013, 03:49 PM Reply Like
  • skibimamex
    , contributor
    Comments (443) | Send Message
     
    you evidently don't know bankruptcy law. If CLWR goes into bankruptcy, the debt holders are only allowed par, and in this bnakruptcy, if the equity holders in this case offers a fullly committed offer to take the bonds at par plus accrued (i.e. a "cram up" with cash), the debt doesnt even get to vote since it is not impaired.
    17 May 2013, 08:39 PM Reply Like
  • milehr
    , contributor
    Comments (499) | Send Message
     
    What's the difference? At $2.97 Sprint will have to spend less that $1 billion to buy the remaining CLWR shares, while the cost of CLWR debt is over $4 billion. Given that some of that debt is owed to S, the remaining part should still be substantially more than $1 billion, or S would have simply forced CLWR into BK and got the company that way.
    18 May 2013, 08:38 AM Reply Like
  • dxbsmith
    , contributor
    Comments (24) | Send Message
     
    Tired of the drama and the dead money. Sold my 8000 shares at a 280% profit and bought SDRL at 34.65.
    17 May 2013, 03:10 PM Reply Like
  • AggGrow
    , contributor
    Comments (195) | Send Message
     
    I predict that shareholders defeat the merger proposal. Sprint walks away. CLWR files BK. Sprint makes an offer to the court to buy out the bondholders at par or less, and shareholders are wiped out. Sprint gets the IP and Spectrum because there is STILL no competing bid, even Dish, and Crest gets a years supply of....nothing.
    17 May 2013, 03:14 PM Reply Like
  • pdinfull
    , contributor
    Comments (41) | Send Message
     
    Sprint is not gonna walk away, why raise the bid now? If the minority holders of Clearwire win, then raise the bid. Heese maybe playing hardball, but he's not an idiot.
    17 May 2013, 03:15 PM Reply Like
  • AggGrow
    , contributor
    Comments (195) | Send Message
     
    That may be true, Pd, but it's equally likely or more likely that Sprint walks and buys it from the bondholders. You have to ask yourself - who else is going to bid for that?

     

    Dish? No! Dish has oodles of spectrum it has to use before such and such a date or it loses it. Dish doesn't want the spectrum. It wants a real business.

     

    Crest? Puh-lease!

     

    Verizon? Maybe but clearly not at $2.97. Maybe if it's a buck, Verizon might grab it, but probably not. They can't really use it.

     

    Softbank? No. No operations in the US? Spectrum without operations is like a DVD without a DVD player.

     

    US Cellular? Maybe, but probably a little rich.

     

    US Cell + another + another? Again, maybe, but I don;t think you can add up all the folks who might be able to use that spectrum and get 10% of Sprint.

     

    So I agree with you, but they won't bid in the market - they'll bid in bankruptcy court.
    17 May 2013, 03:24 PM Reply Like
  • biffster7199
    , contributor
    Comments (81) | Send Message
     
    Read Mathew Rocco's blurb on FOX business - he proves math is'nt a strong suite of his. First the title of his blurb is that CLWR shareholders will likely vote down a takeover. He then goes on to say that Sprint(S) has indicated it has the support of approximately 26% of shareholders -which would consitute a majority of the shares they don't already own (which is what Sprint needs to win the takeover battle) . So which is it Mathew Rocco?
    17 May 2013, 03:18 PM Reply Like
  • heloise8
    , contributor
    Comments (439) | Send Message
     
    I agree with Agg that CLWR holders will get S shares and since I have both what's there to lose or the big deal. I voted for the proposal and got two more ballots in the mail including the gold ballot from disgruntled somebodies.

     

    What else to do?
    17 May 2013, 03:52 PM Reply Like
  • skibimamex
    , contributor
    Comments (443) | Send Message
     
    it doesnt make sense for any long holders to vote for the deal except the passive index funds that vote based upon the vote of ISS etc.

     

    the typical risk-arb play is to arb a discount to the deal price. CLWR here offers a strange dynamic for a short risk-arb trade.

     

    here's the dynamic. the stock trades like water. an arb creates a large boxed position. in other words, every long shr he buys, he shorts a share to "box" his position, i.e. he is hedged. After the record date, he can unwind his long (and would still keep the vote, since he was the record holder at the record date), so now he's short at 10% above the deal price, and he has stripped off the vote from his long shares to vote his shares.

     

    he's got two risk, maintaining the borrow if the borrow comes in if his lender want to vote the shares, and then where would the stock trade if the deal was voted down. does it go up? Where's the next offer when Sprint isnt selling. will it go up if CLWR threatens bankruptcy; it would the first bankruptcy in 20 years of investing in distress names, that the stock of a company goes up when the company threatens or actually files bankruptcy. so how does the stock go up,..only if Sprint offers a higher price. And Sprint already has locked up the 13% of SIG control shares at $2.97, so why would it raise the price versus simply following through and buying that slug at $2.97. There will be plenty of opportunities for Sprint to provide capital at economically dilutive prices.

     

    What I think will happen is that they delay the vote, and which forces CLWR to take another $80MM, and then let CLWR miss its coupon to use its 30 day grace period, then delay the vote again and take another $80M, so now CLWR has gotten $160M towards the $260M coupon. Then let the vote fail (or maybe the gnats will be tired by then). Lastly by that time, the lock-up expires in November and just wait. ClWR aint going anywhere. Just keep it on a leash..
    17 May 2013, 08:58 PM Reply Like
  • biffster7199
    , contributor
    Comments (81) | Send Message
     
    ski,

     

    you offer the proper answer to math that didn't add up. SIGs own 13% of all ,non-Sprint owned shares i.e 26 % OF THE SHARES TO BE TENDERED ;) NOT 26% of all the outstanding shares. I still stand by my other points and I think others such as yourself bring up even more excellent reasons this deal is not gonnafly as currently structured.
    17 May 2013, 09:18 PM Reply Like
  • skibimamex
    , contributor
    Comments (443) | Send Message
     
    I dont think that the deal is going to fly but it may be closer than most people think because of the risk-arb play (to capture the discount).

     

    People have all these opinions but the one thing they didnt do is to read the proxy statement which describes the background of the merger. Softbank and Sprint never wanted to buy the public minority shareholders. they only wanted to buy the SIG shares which had governance attributes that countered Sprint's control shares. It was Stanton and the special committee of the board that insisted or "begged" is more like it that instead all the minority holders get a tagalong with the SIG holders.

     

    Soooo funny that Crest and Mount Kellet will be playing right into Softbank's hands. Frankly, Softbank would rather save the money from buying out the public minority and instead use that $1.6B to buy more Sprint shares, i.e. pay cash for 70% of existing Sprint shareholders' shares(rather than 55%) and that leaves the stub owning 20% of the pro forma newco.
    17 May 2013, 11:39 PM Reply Like
  • Gil Meriken
    , contributor
    Comments (18) | Send Message
     
    "And Sprint already has locked up the 13% of SIG control shares at $2.97, so why would it raise the price versus simply following through and buying that slug at $2.97"

     

    So now that Sprint has raised the price, can you explain why? Which part of your viewpoint does this modify/invalidate? Honestly asking, it seemed like you had/have a well-thought out position on this mess.
    21 May 2013, 02:24 PM Reply Like
  • biffster7199
    , contributor
    Comments (81) | Send Message
     
    Probably because members of the SIG , like Craig McCaw, have a "true-up" clause which mandates they get any improvement in buyout price.
    21 May 2013, 05:54 PM Reply Like
  • Mr Whigglee
    , contributor
    Comments (2) | Send Message
     
    mccaw's ' make whole agreement' is the doc your referring to...
    26 May 2013, 11:34 AM Reply Like
  • Gil Meriken
    , contributor
    Comments (18) | Send Message
     
    Curious to hear your take on the Clearwire drama that is unfolding, now that Sprint raised over themselves ($2.97 to $3.40) right before the initial vote was to take place, and now Dish has thrown out an offer of $4.40.

     

    "so how does the stock go up,..only if Sprint offers a higher price. And Sprint already has locked up the 13% of SIG control shares at $2.97, so why would it raise the price versus simply following through and buying that slug at $2.97. There will be plenty of opportunities for Sprint to provide capital at economically dilutive prices. "
    30 May 2013, 11:45 PM Reply Like
  • biffster7199
    , contributor
    Comments (81) | Send Message
     
    All right, in all fairness to Matthew Rocco of FoxNews it was a Reuters article that's math didn't add up. You see if Strategic Investors in clearwire (CLWR) (i.e. Intel, Time Warner, Etc) who own 26% of the REMAINING (i.e. non-Sprint held) outstanding shares of clearwire (CLWR) approved of the merger , then Sprint would have a majority of the non Sprint shares tendered - hence the merger would be approved. OTOH if Reuters has spoken to owners of 31% of clearwire (CLWR) who have indicated that they are NOT in favor that would mean one or more of the "strategic" investors was unhappy with the deal in order for their math (31% +26% = 57%) to add up. Something tells me there's a whole lot of fibbin goin on. Agg, I beg to differ with you, if clearwire goes BK all bets are off, especially in light of charges of spectrum hoarding/parking and the fact that DISH owns a fair portion of clearwire's (CLWR) debt. Furthermore, this would put the kibosh on Sprint's (S) 4G TDD-LTE rollout so it's not gonna happen. Anyone who does'nt see the problem with Sprint's(S) lowball bid for clearwire (CLWR) is either ill-informed, a shill for Sprint, or has'nt been a long-term investor in clearwire (CLWR) who has suffered over the last several years from Sprint's effective "negative control" of clearwire (CLWR) and the subsequent drop in the price of their shares IMO.
    17 May 2013, 09:07 PM Reply Like
  • Dave"T"
    , contributor
    Comments (31) | Send Message
     
    biff, Y do you want to blame Sprint for Clearwire's ineffectiveness? Sprint has been shoring up Clearwire and allowing it to maintain it's due governance. Sprint hasn't always held it's 51%. The long shareholders have to realize they have contributed to the demise of their company allowing management to guide it to it's present situation.
    Now it is up to Clearwire's investors to decide which debt option and company they want to guide it forward. Dish lacks experience in this arena, whereas, Sprint could merge in much better. Dish would be a higher leveraged option than Sprint and now Dish is digging for more debt to buy into Sprint. What of Clearwire's customers? Better with Dish? I doubt it.
    18 May 2013, 09:52 AM Reply Like
  • Mr Whigglee
    , contributor
    Comments (2) | Send Message
     
    AggGrow, please expain this comment.

     

    That, plus the fact that CLWR shareholders become S shareholders, should mean that no real investor should be disheartened by Sprints lowball bid.

     

    e.g. if i own 100,000 shares of clwr and the sprint deal at 2.97 gets voted FOR on 5-21-13, my clwr shares convert to sprint?
    19 May 2013, 07:49 PM Reply Like
  • dxbsmith
    , contributor
    Comments (24) | Send Message
     
    I am dumbfounded. I simply cannot understand the shortsightedness of CLWR stockholders .Softbank, Sprint/Clearwire and China Mobile all operate, or will operate, on the fastest, most comprehensive system known to man to date. Who would not want to be in on the ground floor of what could become the largest telecommunications network in the world
    Don't waste your breath in telling me that my comments are speculative. If you are a Sprint or Clearwire investor, you are a speculator..
    19 May 2013, 11:00 PM Reply Like
  • milehr
    , contributor
    Comments (499) | Send Message
     
    CLWR shareholders want a fair value of their holdings. Do you understand now?
    11 Jun 2013, 09:29 AM Reply Like
  • biffster7199
    , contributor
    Comments (81) | Send Message
     
    Yup that about sums the whole thing up milehr. Couldn't agree with you more!!
    11 Jun 2013, 12:10 PM Reply Like
  • biffster7199
    , contributor
    Comments (81) | Send Message
     
    One word: D-I-L-U-T-I-O-N
    20 May 2013, 12:24 AM Reply Like
  • pdinfull
    , contributor
    Comments (41) | Send Message
     
    Dxb you're correct, but its only a small portion that are short sighted, I would bet to say, the smarter investors will prevail. Those that are rooting for Dish are just looking for a quick buck. If Dish prevails i will be dumping a ton of Sprint shares.
    10 Jun 2013, 04:26 PM Reply Like
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