... that it emboldens clearwire's minority shareholders.
Crest's shareholder surveys already established that a substantial majority of clearwire's minority shareholders were planning to vote no on the merger. IMO, it was exactly that negative sentiment that emboldened Dish to make it's bid.
While it's true that Sprint's ownership wouldn't allow dish to acquire a controlling stake in clearwire, a successful bid by dish for minority ownership would provide dish with a valuable asset that softbank desparately wants. It also provides a conduit by which dish could pick up chunk(s) of valuable clearwire spectrum for more than softbank's bid values it at... but a whole lot less than it's actually worth.
So yes, Virginia... this is a serious offer. Anytime somebody in the corporate world tries to steal something for pennies on the dollar, you have to expect things like this. My posts on this board since the sprint/softbank bid for clearwire laid out the argument that $2.97 was a floor and there was plenty of upside... because there's NO WAY Softbank's Mr. Son would walk away from this opportunity for less than $4 to $4.50 a share...
... it's simply too valuable... especially to him.
While I agree Son will likely bid more to get this done, I am a bit amused by those that claim CLWR's 2.5 spectrum is worth anywhere close to $36B. The physics of 2.5 dictate that, unless it is paired with other frequencies in a Network Vision-type approach, it is really not valuable except for PTP backhaul.
Everyone has looked at 2.5 in the past but nobody has made it work. I have a dual band Rev A/WiMax card and the WiMax is rarely as good as the 1.9 3G.
There is a reason why DISH, VzW, and ATT spent so much dough on 700 MHz.
... on msg boards like this, people often say anything.
The most plausible valuations that I've seen placed on clearwire's spectrum occurred 2 years ago when clearwire was the closest it came to actually selling a 40 mhz chunk. At that time, very astute projections from many CFA's at major brokerages were putting that chunk at between $2.5 and $5 billion and, since clearwire has around 4 times that in total... the insinuation was that the market value was $10 to $20 billion.
Given that 160 mhz was way more than what the market ever could have borne at that time, I personally figured that $8 to $18 billion was more realistic in any net-liquidating calculations, but that $10 to $20 billion would probably make sense today for 2.5ghz spectrum if not emcumbered by the dominating presence of Sprint and their 2 to 3 year campaign of driving clearwire's stock into the toilet.
Realistically, Sprint's presence and contractural dependence on clearwire's spectrum reduces it's value another 10 to 15%, IMHO, and makes a buyout of minority shareholders nauseating, but reasonable, between $4 and $4.75 a share.
The first one is simply that Sprint doesn't have the votes to consummate it's ridiculous offer.
Crest did Dish a favor by establishing the degree of opposition among minority shareholders. Dish, in turn, has "piled on" with a strong indication that there are certainly alternatives... so any minority shareholders who were wavering before the Dish offer are now emboldened and even more likely to tell Dan Hesse where he can shove his ridiculous offer.
The second one is that if the FCC didn't like the idea of a Japanese company controlling more U.S. spectrum than AT&T and Verizon combined... the Dish offer signals to the FCC that there are alternatives to the kind of concentrated, spectrum ownership that the FCC dispises.
Once Softbank's Mr. Son realizes that he's going to lose the vote, he'll bump his offer... plain and simple.
Clearwire's spectrum... intact... is conservatively worth twice what Son offered for the company net of debt. If he bumps to $4, then he would still get his deal of the century and he knows it.
FWIW, Dish's offer is authentic simply because Charlie Ergan thinks like Warren Buffett when it comes to great value for a ridiculous price. He knows that Mr. Son doesn't want to have to dicker with minority ownership and that in the unlikely event that Son DIDN'T out-bid him, he'd simply either leverage the position for access to sprint's network infrastructure, or he'd re-sell his position after U.S. wireless internet volumes double again and Mr. Son pays him a premium for it. If Clearwire were going for anywhere near fair value, nobody would be bidding for a minority stake... but as long as clearwire is going for less than half it's fair value, then that makes even a minority stake in such a valuable, finite resource quite a catch.
Once Mr. Buffett's advisors let him know that Clearwire at $3.30 a share is like light, sweet crude oil in the ground for $20 a barrel... maybe HE'LL make a bid too.
Good analysis but dish would go above $4 for sure so SB is going to have t pay retail prices not steal clwr as big Dan thought would save his #$%$. SB is likely to walk from sprint without clwr as I see it.
The problem for dealing with this by the FCC is that the spectrum DISH wants is the same spectrum that Sprint occupies and wants to move into.. the 'clean spectrum'. The rest of the spectrum is a more convoluted mess.. its still good spectrum for deployments but comes in patches, without direct ownership of the licenses and payments and renewals ... until it is put to use its a capital drain with no ROI.
How would the FCC dispense with the spectrum DISH, Sprint do not immediate want to use? It is not a simple issue because the actual licenses are owned by diverse institutions such as Catholic, Baptist and other religious organizations, educational insitutions. The FCC would create a firestorm of public debate and objections if they wanted to rip up all those licenses to put that spectrum out for auction. How else might they handle it? "... we don't know because we are just investors". Its important to at least understand that not all the spectrum is 'equal'.. that some of it is choice cut fillet mignon and some of it is hind quarters and a bit knarly. That makes this not a simple issue for the FCC to bang the gavel on or, similar, for the courts to try to intervene.
The "bidding" war has begun. I wouldn't be surprised that certain S/CLWR "agreements" are ruled invalid by the courts. Things are beginning to look interesting and messy. Blood is in the water, us little fish should stand back and watch the feeding frenzy.
The best outcome for the minority investors is that none of the sharks get the upper hand and CLWR is forced to BK with spectrum going to the market in about 2 - 4 yrs. JMO
Based on the price spectrum has been sold in the past, CLWR's spectrum can be worth up to 36 billion dollars. Subtract CLWR's debt and the stock is still worth 29/share.
I think there was some hanky panky going on with CLWR's Board members.
In the words of a recent state legislator, "I wonder who had their hands under the table? I wonder how much each hand was able to grab?" "I always had by hand under the table."
I believe if it takes a long time to get the spectrum to auction it will be worth more than now, but I dont see it going for this much. Technology is allowing better use of all spectrum.....so this will have a detrimental effect in the long run to counter the higher bandwidths being used. They are just figuring ways to parse and get more on the bandwidth that is available......that is all. I think the stock will end up 5-6 per.....over that is pie in the sky. Not all want this bandwidth range...that is the true problem.
Read through Sprints response to the DISH offer and ask if Sprint can have what they believe is full control of assets and deal making control yet avoid a fiduciary to the Non-Sprint shareholders of Clearwire (read retail investors)? They have a direct and clearly stated control of Clearwire operations, if their statements are accurate, yet have not acted in a fiduciary manner with the initial offer or now in an attempt to stop counter offers from being considered. I believe Sprints response has proven what Crest has put in its petition to the courts.
Like you Spok, I believe the $5.5B offer is real and serious consideration should be given to establishing a second Independent Special Committee that has not been appointed by Sprint for the DISH Proposal review.
From Market Watch:
Summary of Sprint Response to DISH Proposal
In response to the DISH Proposal, Clearwire has received a letter from Sprint stating, among other things, that Sprint has reviewed the DISH Proposal and believes that it is illusory, inferior to the Sprint transaction and not viable because it cannot be implemented in light of Clearwire's current legal and contractual obligations. Sprint has stated that the Sprint Agreement would prohibit Clearwire from entering into agreements for much of the DISH Proposal. The following is a summary of Sprint's statements in its letter regarding the material terms of the DISH Proposal:
-- Spectrum Purchase. Sprint has stated that, under the Sprint Agreement, Clearwire is prohibited from selling the Spectrum Assets without Sprint's consent. In addition, Sprint has stated that Clearwire is further subject to various requirements under its commercial agreements with Sprint and the Equityholders' Agreement applicable to selling Spectrum Assets, even if the Merger Agreement were not in place.
-- Commercial Agreement. Sprint has stated that, under the Merger Agreement, Clearwire is prohibited from entering into the commercial agreement proposed by DISH so long as the Merger Agreement is in place.
-- Acquisition of Clearwire Shares. Sprint has stated that the DISH Proposal may constitute a change of control under the Equityholders' Agreement, which would require the affirmative vote of 75% of the issued and outstanding shares of Clearwire's stock. Sprint has stated it would not vote in favor of the proposed transaction with DISH.
-- Governance. Sprint has stated that (i) it would be impermissible under Clearwire's current Equityholders' Agreement for Clearwire to agree to nominate DISH's designees to the Clearwire Board, (ii) it would be impermissible under the Equityholders' Agreement for Clearwire to create a new independent committee of the Clearwire Board and (iii) under Delaware law, certain governance rights requested by DISH (including the request for proportionate board representation) cannot be granted by Clearwire in a manner that does not require amendment of the certificate of incorporation or consent of Sprint to a shareholder agreement embodying what DISH has requested.
-- Funding. Among other arguments, Sprint has stated that the complex financing provisions of the DISH Proposal must also be considered in light of the existing Clearwire contractual arrangements (including debt arrangements) and that it is not clear from Sprint's review that such financing is permitted by or would comply with Clearwire's existing arrangements. In addition, Sprint has stated that Sprint and the other parties to the Equityholders' Agreement would have preemptive rights with respect to any issuance of exchangeable notes by Clearwire as contemplated by the DISH Proposal, and any issuance of such notes may also require Clearwire stockholder approval in accordance with the NASDAQ listing requirements.
-- Sprint Financing. Sprint has stated that it is concerned with Clearwire's failure to consummate the January 2 tranche of funding under the Sprint Financing Agreements, that it does not believe Clearwire's initial draw notice was revocable and that it has reserved its rights relating thereto.
Fineinvestor: Very good point. That's the first reaction I had when I saw Sprint's statement which basically threatened CLWR through the obvious control they wield, even though they have claimed that they work with an independent CLWR board when it suited them. I don't think Crest will have a hard time convincing the court now.
so, sprint blinked and laid out it's hand...charlie ergen now knows more about what sprint thinks it has against clwr and so does the rest of the world....hesse has exposed himself and now mr son must make a move...
Love how Sprint claims all these things as if their agreement has been approved. The Sprint deal hasn't been approved by shareholders so, none of these things that Sprint claim Clearwire can not do matter!
I completely agree that the $2.97 set a floor, and I am absolutely beating myself up for not buying a bunch earlier this week. I was so close, but I thought I could hold out for $2.88 like I saw last week when my funds were tied up. If this news had taken another week I would be golden. Ugh.
I have followed this stock very, very closely over the past year and used to post a bunch. I bought about 200 $0.50 strike call options back when the stock dipped below $1.00, but sold my position into the initial hype over the SoftBank offer for Sprint in October at around $2.20.
What I find intriguing is the offer to buy 24% of the spectrum for $2.2B. So Clearwire could take care of roughly half of their crippling debt, and still have more spectrum left than any other company? I was calling for such a scenario back over the summer. It is hard for me to see how that could not be superior to Sprint's offer, because it would leave a profitable Clearwire that could blossom into the future.
Man it kills me to see all of the money that I missed out on, but I am worried I should just accept that I may have missed the boat.
Sprint has one major hang up and that is the FCC and Gov. Now we have a American company looking at CLWR not the House of the Rising Son to take control of all this U.S. Spectrum and it just may be the stopper to the Son 70% take over of Sprint. The FCC and Gov. could allow the 25% that is in the law books and if Son excepts that or not will be the main Deal Breaker.
Will Son merge with Sprint for only 25% and not have control? if not Sprint is back to square one no money lot a debt and maybe the lost of Clear as that deal will also fall
Sentiment: Strong Buy