So how is Sprint going to handle Dish’s counter offer for Clearwire?
One option that Sprint Nextel Corporation (NYSE:S) has is to raise its offer for the second time and resolve the problem. There is no doubt that Clearwire investors are hopeful that the Kansas carrier would raise its bid again to eliminate all uncertainties and acquire the company. Crest Financial, an active critic investor of Clearwire, has urged the company board to evaluate Dish’s bid and also be open to other potential offers to maximize shareholder return. However, sweetening the bid for the second time would hurt Sprint and Softbank’s long term goal.
Will Softbank raise its bid for Sprint Nextel Corporation (NYSE:S) and help it in fighting Dish to acquire the spectrum rich carrier?
What to expect?
The Asian carrier has overcome the major hurdles in acquiring Sprint. It recently cleared the biggest barrier concerning the security of the U.S. As per the agreement reached with the U.S. government, regulators would have the authority to investigate equipment purchased by the merged company. The Japanese telecom provider has already assured regulators that it would not buy equipment from Chinese component makers. While this issue was resolved, Softbank has another problem to solve.
The shareholder advisory firm Egan-Jones says that Softbank will have to increase its $20.1 billion bid for Sprint. This would facilitate the carrier to make a higher offer for Clearwire Corporation (NASDAQ:CLWR) and win it from Dish. However, Softbank is pretty confident about its proposal and considers it to be superior to the $25.5 billion offer made by Dish. The synergies in combining with Softbank are way higher for Sprint than merging with Dish, which is an immature player in the telecom industry.
Softbank says that even if Sprint Nextel Corporation (NYSE:S)’s attempt to acquire Clearwire falls through, it would not be much of a loss as Sprint already owns a majority stake in the company.
My takeaway
However, I believe Dish’s potential position as a stakeholder in Clearwire would be troublesome for Softbank and Sprint. But again, Dish’s chance of taking over Clearwire is very distant, as Sprint is a majority stakeholder. Under no circumstances should the Kansas carrier let Dish acquire Clearwire, as that would invite an unwanted headache for the telecom giant.
Dish’s eleventh-hour bid for Clearwire has complicated the wireless deal, opening up several scenarios. What a mess! Softbank is trying to acquire Sprint. Sprint gets an offer from Dish as well. Sprint attempts to acquire Clearwire. Clearwire is approached by Dish. One thing is for sure. Dish is getting extremely desperate to diversify into the mobile wireless industry. If nothing materializes for the satellite provider either with Sprint or Clearwire, chances are high that it would targetT –MobileUS. It would be interesting to watch how the telecom players involved in these deals play their card.
Sprint Nextel Corporation (NYSE:S) is in its crucial stage which shall decide its future outlook. I believe that there is huge potential for the stock as Sprint awaits its combination with the terrific telecom giant Softbank. Sprint shall receive the required cushion in terms of expertise and finance. Also, Clearwire’s acquisition by Sprint is more certain that its acquisition by Dish. With fabulous spectrum position and strong finance backing, Sprint is set to delight its investors. It’s a thumps up from my side. What do you say?
Rajesh Marwah has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Sprint Is Again Agitated by Dish’s Bid For Clearwire originally appeared on Fool.com.
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