Less than a week after we began hearing rumblings that Sprint may be interested in acquiring the remaining portion of Clearwire that it didn't already own, the carrier has announced that just such a deal has been made. Sprint revealed this morning that it's agreed to acquire approximately 50 percent stake in Clearwire for $2.97 per share, which works out to a total payment of around $2.2 billion. The deal was given a unanimous approval from Clearwire's board of directors, and Japanese carrier SoftBank, which recently agreed to purchase a majority stake in Sprint, also gave its consent to the Sprint-Clearwire agreement.
Sprint says that it's "uniquely positioned" to take advantage of Clearwire's 2.5GHz spectrum thanks to its Network Vision plans, adding that its interim funding will help Clearwire continue deploying 4G LTE coverage and supplement Sprint's own LTE rollout. Sprint has long been rumored to be interested in a full-on Clearwire acquisition, and despite the fact that the carrier at one point decided to drop its portion of Clearwire below 50 percent, it appears that the two were finally able to work out an agreement. The deal is subject to the usual regulatory approval, and it's also contingent on the Sprint-SoftBank merger going through, the latter of which is expected to happen in the middle of 2012.
Sprint and Clearwire will be holding a joint conference call to discuss the deal later this morning. We'll be listening in to see if the two companies have any other juicy details to share, but until then, you can find the official announcement of the agreement below.
Sprint to Acquire 100 Percent Ownership of Clearwire for $2.97 per Share
OVERLAND PARK, Kan. & BELLEVUE, Wash. (BUSINESS WIRE), December 17, 2012 - Sprint (NYSE:S) today announced that it has entered into a definitive agreement to acquire the approximately 50 percent stake in Clearwire (NASDAQ: CLWR) it does not currently own for $2.97 per share, equating to a total payment to Clearwire shareholders, other than Sprint, of $2.2 billion. This transaction results in a total Clearwire enterprise value of approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion.
The transaction consideration represents a 128 percent premium to Clearwire's closing share price the day before the Sprint-SoftBank discussions were first confirmed in the marketplace on October 11, with Clearwire speculated to be a part of that transaction; and, a 40 percent premium to the closing price the day before receipt of Sprint’s initial $2.60 per share non-binding indication of interest on November 21.
Clearwire’s spectrum, when combined with Sprint’s, will provide Sprint with an enhanced spectrum portfolio that will strengthen its position and increase competitiveness in the U.S. wireless industry. Sprint’s Network Vision architecture should allow for better strategic alignment and the full utilization and integration of Clearwire’s complementary 2.5 GHz spectrum assets, while achieving operational efficiencies and improved service for customers as the spectrum and network is migrated to LTE standards.
Sprint CEO Dan Hesse said, “Today’s transaction marks yet another significant step in Sprint’s improved competitive position and ability to offer customers better products, more choices and better services. Sprint is uniquely positioned to maximize the value of Clearwire’s spectrum and efficiently deploy it to increase Sprint’s network capacity. We believe this transaction, particularly when leveraged with our SoftBank relationship, is further validation of our strategy and allows Sprint to control its network destiny.”
The transaction was unanimously approved by Clearwire’s board of directors upon the unanimous recommendation of a special committee of the Clearwire board consisting of disinterested directors not appointed by Sprint. In addition, Clearwire has received commitments from Comcast Corp., Intel Corp and Bright House Networks LLC, who collectively own approximately 13 percent of Clearwire’s voting shares, to vote their shares in support of the transaction. SoftBank has provided its consent to the transaction, as required under the terms of its recently announced merger agreement with Sprint.
Clearwire CEO and President Erik Prusch said, “Our board of directors has been reviewing available strategic alternatives over the course of the last two years. In evaluating available alternatives, a special committee conducted a careful and rigorous process, and based on the committee’s recommendation, our board unanimously determined that this transaction, which delivers certain and attractive value for our shareholders, is the best path forward.”
In connection with the transaction, Clearwire and Sprint have entered into agreements that provide up to $800 million of additional financing for Clearwire in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share, subject to adjustment under certain conditions. Under the financing agreements, Sprint has agreed to purchase $80 million of exchangeable notes per month for up to ten months beginning in January, 2013, with some of the monthly purchases subject to certain funding conditions, including conditions relating to the approval of the proposed merger by Clearwire’s shareholders and a network build out plan.
The transaction is subject to customary closing conditions, including regulatory approvals and the approval of Clearwire’s stockholders, including the approval of a majority of Clearwire stockholders not affiliated with Sprint or SoftBank. The closing of the transaction is also contingent on the consummation of Sprint’s previously announced transaction with SoftBank. The Clearwire and SoftBank transactions are expected to close mid-2013.
Citigroup Global Markets Inc. acted as financial advisor to Sprint and Skadden, Arps, Slate, Meagher & Flom LLP and King & Spalding LLP acted as counsel to Sprint. The Raine Group acted as financial advisor to SoftBank Corp. and Morrison Foerster LLP acted as counsel to SoftBank. Evercore Partners acted as financial advisor and Kirkland & Ellis LLP acted as counsel to Clearwire. Centerview Partners acted as financial advisor and Simpson Thacher & Bartlett LLP and Richards, Layton & Finger, P.A. acted as counsel to Clearwire’s special committee. Blackstone Advisory Partners L.P. advised Clearwire on restructuring matters. Credit Suisse acted as financial advisor and Gibson Dunn & Crutcher LLP acted as counsel to Intel.