Sprint said it would also provide interim financing of $800 million to cash-strapped Clearwire if shareholders agree to the $2.90 offer. But analysts said that Clearwire shareholders would be very unlikely to accept Sprint's offer, which would allow the No 3 US mobile service provider to take full control of Clearwire's spectrum holdings to bolster its own wireless data services.
While Clearwire has been looking for new financing, analysts said that its need is not so urgent that it should accept Sprint's offer which they described as a "starting point." "With a year of liquidity on the books and the alternative of raising additional equity or refinancing debt at this level, Clearwire is hardly without options, and we don't see why the company would necessarily jump at a the $2.90 bid," J.P. Morgan analyst Philip Cusick said in a research note.
Wells Fargo analyst Jennifer Fritzsche said Sprint's offer price compared poorly to other deals in the US wireless industry that involved sales of wireless spectrum holdings. She calculated that comparable deals had valued wireless spectrum at fifty percent more than Sprint was offering to pay Clearwire. Sprint declined to comment on whether it would revise its offer. Its proposed price is 5 percent higher than Clearwire's closing stock price on Wednesday, but more than double its $1.30 price on October 10. Clearwire shares have risen sharply since then on increasing investor speculation that loss-making Sprint would use new financing from Japan's Softbank Corp to buy Clearwire. Sprint agreed in October to sell a 70 percent stake to Softbank for $20 billion.
Clearwire, which also counts Sprint as its biggest customer, has long been seen by analysts as an acquisition target for Sprint, which needs to improve its network to compete with bigger rivals Verizon Wireless and AT&T. Clearwire said in a regulatory filing on Thursday that it is currently in talks with Sprint regarding a "potential strategic transaction" and that a special committee of its board of directors has been reviewing the potential deal.
It did not offer an immediate response to the $2.90 offer. Clearwire, which has been looking to raise more financing to upgrade its network and to keep the business afloat, has said that it has enough money to last it until the third quarter. The offer from Sprint, which already owns 50.4 percent of Clearwire's total outstanding shares, values Clearwire at around $4.2 billion. Some minority Clearwire shareholders - including Mount Kellet Capital Management LP and Crest Financial Limited - have expressed concerns over a deal with Sprint, suggesting that Clearwire should look at other options.