DISH Network Bids for Clearwire - Analyst Blog
January 09 2013 - 7:40AM
Zacks
Yesterday, in a surprising move,
DISH Network Corp. (DISH) stated its keenness to
purchase the remaining 49% stake of 4G WiMAX wholesaler
Clearwire Corp. (CLWR) for $3.30 per share. DISH,
the second largest satellite TV operator in the U.S., is
desperately trying to enter into the lucrative wireless market.
Recently, DISH Network got the FCC nod to install a nationwide
wireless network using its 40 MHz spectrums, which the company
purchased in 2011.
On the other side, Sprint
Nextel Corp. (S), the 51% shareholder of Clearwire has
given a $2.97 per share bid to acquire the remaining 49% of
Clearwire last month. Sprint has undertaken a massive project to
expand its LTE network. DISH’s proposal is undoubtedly better than
Sprint’s but it is contingent upon Sprint’s decision to waive its
own shareholder right, which in all likelihood, the company will
not do.
Secondly, DISH’s proposal, has a
total consideration of $5.15 billion and includes several
conditions. Per the conditions, the company must get at least 25%
of Clearwire’s controlling stake to nominate board members, it will
pay $2.2 billion to get a 24% stake of 2.66 GHz spectrum of
Clearwire, Clearwire will build and manage a wireless network for
DISH and DISH will provide an additional $800 million to Clearwire
to terminate its financing deal with Sprint.
Clearwire stated that a special
committee of its Board of Directors will discuss the proposal with
DISH. At the same time, the company also mentioned that the special
committee so far, has not made any change to its recommendation on
the already submitted offer by Sprint.
We reaffirm our long-term Neutral
recommendation on both DISH and Sprint. Currently, both the
companies enjoy a short-term Zacks #3 Rank (Hold) on their
respective stocks. Clearwire also enjoys a short-term Zacks #3 Rank
(Hold) on its stock.
CLEARWIRE CORP (CLWR): Free Stock Analysis Report
DISH NETWORK CP (DISH): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
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