Sprint Nextel Corporation (NYSE:S) has offered to buy the remainder of the 49% of Clearwire Corporation (NASDAQ:CLWR) that it does not already own. In a 13D filing with the SEC this week, Crest Financial announced it purchased another 11 million shares, increasing its stake to 57.7 million shares – or around 3.9% of Clearwire’s outstanding shares.
The stake increase comes as an effort to block the $2.2 billion offer by Sprint to buy the wireless spectrum company Clearwire. Crest purchased the shares for $3.30 in the open market, compared to Clearwire’s current share price of $2.90. Clearwire said on Monday that its board supports the Sprint deal and that it could risk a financial restructuring if it does not succeed.
Sprint’s offer comes in at $2.2 billion or $2.90 per share. The announcement comes roughly eight years after Sprint announced its merger with Nextel – a segment and service that Sprint now plans to shut down in 2013. David Einhorn, the founder of Greenlight Capital, remains one of Sprint’s largest shareholders (see David Einhorn’s newest picks).
The Softbank acquisition of a 70% stake in Sprint has provided the mobile communication company with $8 billion in capital. This capital injection is in part fueling Sprint’s push to finish buying up Clearwire. The $20 billion investment by Softbank will be split between shareholders and acquisition capital for the company, with around $12 billion paid to Sprint shareholders, with $8 billion left to the company for strategic acquisitions.
Sprint’s purchase of Clearwire will give Sprint complete control of its spectrum – meaning better performance for current subscribers and the ability to accommodate more subscribers overall. Worth noting is that the spectrum owned by Clearwire is the same frequency as that of Softbank’s, and not the same type as Sprint’s. The Sprint offer has pushed Clearwire’s stock up 30% over the last month. Billionaire George Soros was one of Clearwire’s newest big-name owners last quarter (check out George Soros’ key stock picks).
The Clearwire acquisition is expected to help Sprint better compete with the likes of Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T), which are the number one and number two wireless providers in the U.S., respectively. Billionaire investor and long-time Forbes columnist Ken Fisher is one of AT&T’s largest owners (check out Ken Fisher’s latest picks).
Read on to find out why Sprint is a better buy than both Verizon and AT&T…