Sprint agrees to Clearwire acquisition

Sprint (NYSE:S) has reached an agreement to pay approximately $2.2 billion for the Clearwire (NASDAQ: CLWR) shares it doesn’t already own. The price tag equates to $2.97 per share for the approximately 50% of Clearwire shares outside of Sprint’s control. Sprint originally had offered $2.60 per share on November 21.

The transaction, if approved, would put Clearwire’s enterprise value at approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion, Sprint says.

Sprint says that by combining its wireless spectrum with Clearwire’s will strengthen its position and increase competitiveness in the U.S. wireless industry.

“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 CEO Dan Hesse said. “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. Meanwhile, Intel and cable MSOs Comcast and Bright House Networks LLC, who combined own approximately 13% of Clearwire’s voting shares, plan to vote their shares in support of the transaction, Sprint says. SoftBank also has consented to the transaction, as required under the terms of its recently announced merger agreement with Sprint (see "SoftBank to pay $20.1B for 70% of 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.”

As part of the deal, Sprint will 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. The agreements call for Sprint to purchase $80 million of exchangeable notes per month for up to 10 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. 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.