--Proxy firms offer differing opinions on Sprint's bid for
Clearwire
--Opposing views on contested deal heightens uncertainty on
vote
Proxy advisory firms offered differing views of Sprint Nextel
Corp.'s (S) contested bid to take over Clearwire Corp. (CLWR),
raising the uncertainty around the May 21 shareholder vote on the
deal.
Sprint agreed to buy the half of Clearwire it doesn't already
own for $2.2 billion, or $2.97 a share, but that offer has been
opposed by numerous shareholders. Influential adviser Institutional
Shareholder Services Inc. is backing Sprint's bid, saying it falls
within "an appropriate valuation range", while rival Glass Lewis
holds the opposite view and contends that Sprint didn't make a
strong enough case for its offer.
It is not unusual for the two biggest proxy advisers to take
differing stances. In a sense, such disagreements help distinguish
Glass Lewis from larger ISS in a highly competitive marketplace for
institutional clients.
"If you vote against the the Clearwire deal, you are betting on
someone else coming in with a higher bid," said Christopher King,
an analyst with Stifel Nicolaus. "That is the game theory that
people who vote against the Sprint transaction are playing."
Clearwire shares recently fell 4 cents to $3.23.
Sprint itself is a takeout target. Japan's SoftBank Corp.
(9984.TO) agreed to buy 70% of the company for $20.1 billion in
October, but Dish Network Corp. (DISH) recently made its own $25.5
billion bid for the wireless carrier.
Both Dish and SoftBank have shown a desire to control
Clearwire's vast holdings of wireless spectrum. SoftBank has
expressed confidence in Sprint's ability to have control over
Clearwire even if the vote fails. Sprint currently own about 50% of
Clearwire, but agreements in place could put that stake above 67%
if the bid falls apart.
A Sprint spokesman said the company is disappointed with the
Glass Lewis opinion and pleased with the ISS recommendation. He
reiterated the view that Sprint's offer gives "certain, fair and
attractive value and is the best strategic alternative for the
company and its minority stockholders."
A Clearwire spokeswoman declined to comment at this time.
Crest Financial is among the funds opposing the Sprint offer and
has launched a proxy fight to sway other shareholders, including
taking its case to proxy advisory firms. Crest officials weren't
immediately available for comment.
Clearwire's board has supported the Sprint deal, saying the
proposed transaction provides the best option for Clearwire's
minority shareholders.
In its report, ISS said the Sprint merger consideration
represents a substantial premium over where Clearwire shares were
trading before the initial rumors of the deal circulated, adding
Clearwire's business is "increasingly unviable on a stand-alone
basis."
It said Clearwire's search for alternative deals "appears to
have been both extensive and well-known in the industry" and notes
that Sprint has "an effective veto over any other source of
financing."
Meanwhile, Glass Lewis said Sprint "failed to provide a clear
and compelling case to suggest the existing offer, as currently
structured, is the best possible alternative available."
The firm conceded that Clearwire needs capital, but it doesn't
appear that the board fully explored all its options before making
a deal with Sprint, citing the subsquent offer from Dish and a
separate bid from Verizon Wireless for some of the Clearwire's
spectrum.
--Joann Lublin and Anna Prior contributed to this article.
Write to Thomas Gryta at thomas.gryta@dowjones.com
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