IMHO, the most important language in the filing is SB desire to gain all of S ownership in CLWR.
No reason for this unless SB is going to purchase the remaining shares. Because with their majority ownership in S it would make no difference from a control perspective. Now SB can directly buy remaining shares allowing S to use the 8 billion to advance NV faster and improve financials, and obtain additional synergies like US cellular coverage in Chicago.
Is there ANY other reason for SB to want direct ownership other than to allow for a tender offer of remaining shares, while leaving S balance shet in good shape? If so, i'd love to hear any other reasoning?
Good luck longs!
Softbank is more active in building data networks to support cloud services and in deploying into 2.6GHz. They see the potential for the band and have the skills and capital to do more with it. That will require working closely with Clearwire. Whether SB would plan to acquire CW down the road is speculative: Son/Softbank has said that they do not need to acquire all of Clearwire to do what they want... which makes sense. Acquisition of Sprint's remaining stake 30% of 51% and additional shares from other holders looks like a reasonable move to assure control of Clearwire, however, there is no reason to acquire the company outright.
Look over Softbank's long history: it started out life by doing consortium deals and has proceeded much that way over the years. It often took positions in ventures that left participation in the hands of other partners of public shares. Recently Softbank spun out an operating company as an IPO which trades separately... so the character of how they structure acquisitions can be seen as being opportunistic and objectives oriented rather than confrontational or egotistic. Therefore, I do not see that they would do other than what Son has indicated.
Agreed, and Softbank/Sprint assisting Clearwire with refinancing it's debt, and funding for an accelerated and expanded TD-LTE network, could all do more for long term investors than a forced buyout at a discount price.
However, it's still my opinion that Softbank offered to buy 70% of Sprint instead of 51% so they could use the excess 19% shares for an acquisition via share exchange.
The risk of not buying CLWR is an offer from another company. SB-S would have to at least match any competing offer for CLWR and the BOD has fiduciary responsibility to protect shareholder assets... Here's an explanation:
The board has duties to the corporation and its shareholders. Why? Because of the fiduciary relationship between the board and shareholders. When directors breach their duties, shareholders can bring a derivative suit against the directors. In additional circumstances such as change of control transactions, mergers and acquisitions, and insolvency, directors also owe shareholders duties, including Revlon duties to achieve the best price for shareholders and to disclose material information and potential conflicts of interest.
I think there are many good reasons for Softbank/Sprint to buyout all of Clearwire, but I don't think threat of another offer is one of them. When I read the equityholder's agreement it states any merger or change in control must be approved by Sprint, Comcast and Intel. I don't see where it states they would have to make a higher offer. Evidence of this is that Sprint has never seemed to worry about someone making a buyout offer for Clearwire. And no one ever has.
I don't see the filing as saying that, even though that may be the goal of Softbank. The two most important messages I got out of it are:
1) Sprint is acknowledging that when the McCaw deal closes, they will have controlling interest in Clearwire in the eyes of the law. And when Softbank acquire's Sprint they will assume that controlling interest in Clearwire and therefore must request approval to acquire Sprint's interest in Clearwire's spectrum licenses, leases, etc.
2) Softbank/Sprint are stating that the reason their merger will be good is because they plan to accelerate the deployment of a multi-band network (i.e. 2.6 ghz and 1.9 ghz) and promote lower priced devices through ecomonies of scale.
And again from the Kansas City Business Journal...please read where it says SoftBank to acquire Sprint's 50.8% interest in CLWR, not the lesser interest they would inderectly inherit from from their ownership in Sprint, but ALL of Sprint's 50.8% interest!!!
Sprint, SoftBank ask for FCC’s blessing of merger
Kansas City Business Journal
Date: Friday, November 16, 2012, 8:06am CST - Last Modified: Friday, November 16, 2012, 1:28pm CST
Sprint Nextel Corp. and SoftBank Corp. formally called on regulators Thursday to ask for approval of a $20.1 billion merger, the Kansas City Business Journal reports.
An application with the Federal Communications Commission asks for permission to transfer Sprint’s wireless licenses and leases to Japanese suitor SoftBank. The filings show that SoftBank also will acquire Sprint’s 50.8 percent interest in communications network company Clearwire Corp.
Here it is in balck and white from Reuters - just read the last sentence...
NEW YORK | Thu Nov 15, 2012 6:18pm EST
NEW YORK (Reuters) - Sprint Nextel (S.N) on Thursday asked the Federal Communications Commission for approval of its agreement to sell 70 percent of the company to Japan's Softbank Corp (9984.T).
Softbank announced a plan to spend $20 billion to take control of Sprint, the No. 3 U.S. mobile provider, on Oct 15.
The companies, which expect the deal to be completed by mid-2013, need FCC approval for the transfer of control of Sprint's spectrum licenses to Softbank.
Sprint, the biggest shareholder in Clearwire Corp (CLWR.O), said that the application also requests approval for Softbank to take over its stake in Clearwire.
They want CLWR out of the market, no longer for sale. That way they will be hoarding all that spectrum by the time everyone realizes the potential of the technology in a couple of years. By that time the specturm will be worth billions but will be out of reach for anyone since it will have been completely acquired. SB knows the potential because they are using it in Japan and other parts of Asia.