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Sprint's Clearwire acquisition may hit roadblock as investors want more than SoftBank is willing to spend

News by Andrew Kameka on Friday December 14, 2012.

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Clearwire majority shareholder Sprint wants to acquire the remaining shares of the struggling wireless company, but a deal may be difficult to reach because investors want much more than Sprint majority stakeholder SoftBank is willing to spend. Sprint has offered $2.90 per share to acquire the 49.55 percent of Clearwire shares that it does not already own; however, investors want more than $5 per share, which is far more than SoftBank has authorized Sprint to spend. Japanese carrier SoftBank has purchased a controlling interest in Sprint and given the company $800 million in interim financing while the deal awaits regulator approval. Sprint cannot purchase Clearwire without SoftBank's approval, and the Japanese firm is reportedly unwilling to spend more than $2.97 per share, according to Reuters.

Clearwire's stock increased to $3.16 when news of Sprint's planned purchase emerged yesterday. The increase in stock price may complicate matters because it increased only because of expectations of an acquisition, not a true depiction of the company's financial health. Clearwire is hemorrhaging money, has low cash, and shows no sign of improving its financial position. The Sprint deal is seen as a long-term fix, but the current price may not be enough to entice the 24.8 of investors necessary to approve any deal.

Reuters reports that Clearwire has other options yet to be discussed, including refinancing its debt to hold out for a higher price or pursuing other strategies. If the company decides to accept Sprint's offer, it would substantially improve Sprint's spectrum holdings and give the carrier more control over its LTE network.

source: Reuters

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Andrew Kameka
Andrew is based in Miami, Florida.

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