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Sprint Buys Clearwire in $10B Deal That Could Build Up its Network

Sprint hopes the deal will increase its position in the competitive U.S. wireless industry

Sprint Nextel Corp.(NYSE: S) will acquire the 50 percent of Clearwire (Nasdaq: CLWR) that it doesn’t already own for about $10 billion.

The price works out to $2.97 per share, and the $10 billion price tag includes debt and spectrum lease obligations. Clearwire’s stock opened at $3 the morning the deal was announced.

The company had offered $2.90 per share in a previous offer.

Sprint can use Clearwire’s spectrum to build out its network and strengthen its position in the U.S. wireless industry.

Clearwire’s board has already approved the deal. Shareholders Comcast Corp., Intel Corp. and Bright House Networks LLC, who collectively own 13 percent of Clearwire’s shares, have agreed to vote in support of the transaction.

In connection with the deal’s closing, the companies have entered into agreements to provide $800 million in additional financing through exchangeable notes.

Sprint announced in November that it would acquire the PCS spectrum and customers of U.S. Cellular for $480 million in cash in another move that it hoped would enhance its competiveness. 

The company still ranks behind market leaders AT&T and Verizon Wireless.

The deal comes after a season filled with wireless M&A activity. Softbank Corp. (TSE: 9984) announced it wanted to acquire 70 percent of Sprint for $20.1 billion in October, after T-Mobile announced a plan to merge with MetroPCS Communications Inc. (NYSE: PCS). 

Softbank approved the Clearwire deal, which won't close until the Softbank deal closes. The Softbank deal is still waiting for regulatory and shareholder approval.

Last year, AT&T proposed to buy T-Mobile for $39 billion, but the deal was stopped by regulators who argued it would reduce competition, limit consumers’ choices in wireless providers and raise prices for mobile services.

Citigroup Global Markets Inc. acted as Sprint’s financial adviser, while Skadden Arps Slate Meagher and Flom LLP and King and Spalding LLP acted as legal counsel. The Raine Group acted as SoftBank’s financial adviser, and Morrison Foerster LLP acted as its legal counsel.

Evercore Partners acted as Clearwire’s financial adviser and Clearwire’s special committee had Centerview Partners as financial adviser and Simpson Thacher & Bartlett LLP and Richards Layton & Finger PA as legal counsel.

Blackstone Advisory Partners LP advised Clearwire on restructuring matters. Credit Suisse was financial adviser and Gibson Dunn & Crutcher LLP acted as legal counsel to Intel. 

 

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