The battle for ownership of Clearwire between Dish Network and Sprint has intensified after the satellite TV company hit back at accusations that its offer runs afoul of Delaware law and Clearwire’s equityholders’ agreement.
Last December, Sprint (Overland Park, KS, USA), Clearwire’s majority owner, made an offer of $2.97 a share for the remaining shares in the operator, to which Clearwire’s managers gave their assent.
A month later, however, Dish (Meridian, CO, USA) topped Sprint’s offer with a bid of $3.30 per share, keen to gain control of the precious airwaves held by Clearwire (Bellevue, WA, USA).
Several weeks ago, Sprint raised its offer to $3.40 a share, but Dish responded last week by saying it would pay as much as $4.40.
Citing law in Delaware, where Clearwire is incorporated, Sprint insists that Dish’s takeover bid is “not actionable” because Clearwire is not permitted to hand over governance rights without Sprint’s consent.
But in a letter sent to the Clearwire board this week, Dish has refuted those claims.
“We remain confident that the Dish proposal is both actionable and clearly superior to the proposed Sprint merger,” said Charlie Ergen, Dish’s chairman. “More importantly, it also provides a meaningful alternative to the significant group of your minority shareholders that remain opposed to the Sprint merger while providing a clear path for Clearwire to become a self-sustaining company.”
Sprint’s bid has already been attacked by Crest Financial, which describes itself as the biggest minority shareholder in Clearwire “unaligned” with Sprint.
Crest has publicized a series of letters arguing that Sprint’s bid is “coercive” and should be rejected by other minority shareholders in the operator.
Clearwire’s board is due to hold a vote on the Sprint bid on June 13, having postponed the date of the shareholder meeting after Dish had improved its offer.
According to Dow Jones, a Clearwire spokesman has said the board is reviewing Dish’s offer but continues to recommend that shareholders support the Sprint bid.
Dish’s letter provides a detailed analysis of objections raised by Sprint, taking particular issue with the claim that Sprint’s consent is required.
“Sprint’s claim that its consent is required (but would not be forthcoming) in order for Clearwire to enter into a financing arrangement on substantially superior terms to the financing arrangement provided by Sprint to Clearwire is simply untrue,” it argues.
“Sprint’s right to consent to financing transactions is limited to a material capital restructuring or reorganization of Clearwire outside of the ordinary course of business,” it adds.