WSJ: Verizon offers $1.5 billion for Clearwire's spectrum license leases in major markets
why isn't this being played up huge by CLWR?
As if the three way love triangle between Dish Network, Sprint and Clearwire couldn't get more complicated, a third party bid of $1.5 billion for Clearwire's spectrum licenses in major markets now makes this an extremely complicated situation. For those who missed it, earlier this morning Dish Network offered to buy Sprint for $25.5 billion. Dish already has an offer on the table to buy the shares of network wholesaler Clearwire not owned by Sprint for $3.30 a share. With a majority of the stock already in hand, Sprint's $2.97 a share bid for Clearwire was pretty much assured to be a winner. And with a deal between Clearwire and Sprint that allowed the network wholesaler to draw down $800 million from the carrier in the form of debt convertible into more Clearwire stock, Dish had all but bowed out of the Clearwire picture. That is, until Monday when Dish Network offered $25.5 billion to buy Sprint, and apparently Clearwire.
But a mysterious third party only called "Party J" and assumed to be Verizon by the WSJ, has offered $1.5 billion to buy spectrum leases owned by Clearwire in major markets. The $1.5 billion that the network wholesaler would receive in the deal would be lowered by the amount it currently pays for the leases, which sources say could be a substantial figure. Sprint, which owns more than 50% of Clearwire could put the kibosh on the offer. Meanwhile, the latter firm said that if no deal is completed, it could face bankruptcy.
And all of this now has to fit into Dish Network's $25.5 billion bid for Sprint, which trumps the offer from Japan's Softbank to purchase 70% of the nation's third largest carrier for $20 billion. And you think balancing your checkbook is hard work?
Why uis the market not reacting with a move higher that the months long range? Ans. Because the offer, from Verizon or whoever else, is a piecemeal deal for spectrum in major markets while Clearwire is not for sale on a piecemeal basis. The offer, although details are sparse, appears to be in the range of prior offers and of a nature that would be another attempt to get at the choice cuts of spectrum at a relatively low price. The offer, for instance, does not assume existing debt. It does call for covering sub-lease costs. Although likely substantial, that does not help pay off losses for past operations, capital expense, etc. that are left on the books to defray the value of CLWR.
Why would Verizon or others make offers for Clearwire's spectrum knowing the circumstances? Because the FCC deliberations are underway in which VZ, ATT, Crest have requested a re-screening of the spectrum for mobile use and possible spin out. Although it looks increasingly unlikely for spin out of spectrum, its quite possible the FCC will encourage the parties come to agreement on sale of spectrum or wholesale leases as a way to smooth the concerns of foreign ownership and future access.
It's not so much the efficacy of the Verizon offer, as you say, as it is the fact that Verizon DID make the offer KNOWING that Clearwire is "not for sale of a piecemeal basis".
When a company is this cheap, and the value this substantial... people show up from everywhere looking to get a piece of it... even if those pieces would never be attractive even at 50 cents on the dollar.
Looking at one bee in the swarm isn't a good idea... when the real story is that there IS a swarm.