Sprint Sues Dish Seeking to Block Clearwire Acquisition
By Jef Feeley - Jun 18, 2013 12:01 AM ET
Sprint Nextel Corp. (S) said it sued Dish Network Corp. seeking to block a buyout of Clearwire Corp. (CLWR), saying Dish’s bid violates rights of investors in the wireless network provider.
Sprint, Clearwire’s largest shareholder, said it sued Dish in state court in Wilmington, Delaware, yesterday to try to halt Dish’s $4.40-a-share bid for Clearwire. Sprint and Dish are both vying to acquire the Bellevue, Washington-based firm.
Pedestrians walk past a Sprint Nextel Corp. store in San Francisco, California, U.S. Photographer: David Paul Morris/Bloomberg
Dish’s offer is designed to coerce Clearwire shareholders into handing over their shares “or else be left holding stock in a corporation that will be handicapped by unlawful corporate governance restrictions, onerous debt provisions and subject to massive monetary damages claims,” according to a copy of a complaint provided by Sprint’s lawyers. The filing couldn’t be confirmed in Delaware Chancery Court after regular business hours yesterday.
Dish, the Englewood, Colorado-based satellite-TV provider controlled by billionaire Charlie Ergen, topped Sprint’s bid for Clearwire last week by 29 percent. Dish’s deal would value all of the shares in Clearwire, including a stake already held byOverland Park, Kansas-based Sprint, at about $6.5 billion.
“We are reviewing the complaint and considering our options,” Bob Toevs, a spokesman for Dish, said yesterday in an e-mailed statement.
Mike DiGioia, a spokesman for Clearwire, said in an e-mail that the company doesn’t comment on pending litigation as a matter of policy.
Sprint, which owns slightly more than 50 percent of Clearwire, has been trying to buy the rest of the company’s shares since December. It increased its offer last month to $3.40 a share, seeking to satisfy a bloc of investors who oppose the deal. A full takeover of Clearwire would let Sprint tap the company’s wireless spectrum, helping the third-largest U.S. mobile-phone carrier bolster its network.
The competition for Clearwire is a spinoff of a takeover battle over Sprint. Dish has offered $25.5 billion for the U.S.’s third-largest wireless carrier behind Verizon Wireless and AT&T Inc. (T)
Sprint has rejected that bid and has accepted a $21.6 billion offer from SoftBank Corp. (9984), the Japanese mobile carrier. Masayoshi Son, who holds a controlling stake in SoftBank, has the backing of Sprint’s board and the wireless company’s second-largest investor Paulson & Co.
Sprint sued after Clearwire’s board recommended last week that shareholders sell their stock to Dish and spurn Sprint’s offer. Institutional Shareholder Services Inc., the largest investor-advisory firm, also endorsed Dish’s Clearwire bid. It cited the “significantly higher” cash amount and the board’s support for the offer.
Sprint contends Dish’s bid for Clearwire is flawed because it depends on obtaining at least 25 percent of Clearwire’s shares and would let the satellite company appoint at least three directors to the board, according to court filings.
Handing over such governance rights to Dish would violate Delaware corporate law, Sprint’s lawyers said in the lawsuit.
Dish’s bid also runs afoul of an equity holders’ agreement forged in 2008 when Clearwire was created as a joint venture between Sprint and other companies, Sprint’s attorneys said in the suit. Accepting Dish’s offer would violate that accord, they added.
The case is Sprint Nextel Corp. v. Dish Network Corp. (DISH), Delaware Chancery Court (Wilmington).
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