The tug of war between Softbank and DISH Network Corp. (NASDAQ:DISH) finally comes to an end as the satellite provider declined to make a higher bid for Sprint Nextel Corporation (NYSE:S). After receiving Softbank’s sweetened proposal of $21.6 billion for a 78% stake in the company, Sprint asked Dish to make its best and final offer by June 18. However, DISH Network Corp. (NASDAQ:DISH) said that it would not revise its bid as it is ‘impracticable’ to make an improved offer within the time span offered by Sprint Nextel Corporation (NYSE:S). This leaves the path clear for Softbank, which has keen interest to enter the US wireless industry and work on the growth prospects of Sprint to contend AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ).
Softbank in progress
After months of fighting over Sprint Nextel Corporation (NYSE:S)’s control, Softbank finally manages to cross both regulatory and competitive roadblocks. Early June, the Japanese carrier raised its bid by $1.5 billion to $21.6 billion to compete with Dish’s bid of $25.5 billion and win shareholder support during the vote, which has been rescheduled for June 25. In addition, the Tokyo based telecom operator also improved the cash component by $4.5 billion to $16.6 billion for an increased stake of 78%.
The revised deal is too compelling for Sprint to demand more from Softbank, and too competitive for DISH Network Corp. (NASDAQ:DISH) to counterbid. Not only is Dish out of Softbank’s way, but a key shareholder Paulson & Co which had earlier raised concerns about Softbank’s proposal is in favor of the revised deal now. As per a filing from Sprint Nextel Corporation (NYSE:S), in case DISH Network Corp. (NASDAQ:DISH) made a higher offer to counter Softbank’s revised $21.6 billion, the Kansas carrier’s board could have ceased its combination with Softbank. But now after the satellite TV operator declined to respond within the deadline, the board does not have the authority to block the Sprint-Softbank merger.
All it needs now is “the FCC and shareholder approvals which will allow us to close in early July and begin the hard work of building the new Sprint into a meaningful 3rd competitor in the US market.” Softbank is pretty confident about the synergies of combination and assures investors that Sprint Nextel Corporation (NYSE:S) would substantially save on smartphones and other equipment through discounts on bulk buy. Moreover, Softbank’s relevant expertise and knowledge in the wireless arena would mold Sprint into a stronger competitor and fight dominant players.
The Kansas carrier’s main purpose to set a deadline for Dish to make an ‘actionable’ proposal was to wrap up the DISH Network Corp. (NASDAQ:DISH) story by June 18 and conclude the deal with Softbank at the earliest. So while Sprint Nextel Corporation (NYSE:S)chose to get into a relation with Softbank, what’s next for Dish?
In pursuit of Clearwire
The satellite TV operator isn’t totally out of the game yet. Though it has decided not to fight for Sprint any further, it has set its eyes on Clearwire Corporation (NASDAQ:CLWR) in which the Kansas carrier owns a majority stake. Both Sprint and DISH Network Corp. (NASDAQ:DISH) are competing to acquire the spectrum-rich Bellevue based carrier. Sprint Nextel Corporation (NYSE:S) increased its bid from $2.97 a share to $3.40 a share to win the favor of Clearwire’s minority shareholders who believe that the proposal grossly undervalues the latter’s spectrum holding.
However, the sweetened bid did not help Sprint as Dish topped Sprint Nextel Corporation (NYSE:S)’s bid by proposing $4.40 a share. The regional carrier’s board has recommended DISH Network Corp. (NASDAQ:DISH)’s proposal against Sprint’s and has asked shareholder’s to vote against the latter in the June 24 meeting, as Dish’s offer values Clearwire Corporation (NASDAQ:CLWR) at $6.5 billion, including Sprint’s stake. The third largest US carrier sued both Clearwire and Dish on Monday, claiming that the offer is illegal since it breaches Sprint Nextel Corporation (NYSE:S)’s position and rights as Clearwire Corporation (NASDAQ:CLWR)’s shareholder. Sprint says that DISH Network Corp. (NASDAQ:DISH)’s proposal is ‘fooling Clearwire’s minority shareholders’ to sell their shares to the satellite provider and reject the national carrier’s offer at the vote. Clearwire Corporation (NASDAQ:CLWR)’s ownership is extremely crucial for Sprint’s future outlook of building a robust and extensive 4G LTE network.
What a turnaround for Clearwire! Last year before Sprint Nextel Corporation (NYSE:S)’s bid the money losing carrier was trading below $1.50 a share. Now it has two suitors fighting for its ownership and pushing its share as high as $4.70.
The bottom line
Though Dish has withdrawn its interest in acquiring Sprint, it has not given up its desire to break into the telecom space. The carrier is focusing on its bid for Clearwire Corporation (NASDAQ:CLWR) in which Sprint Nextel Corporation (NYSE:S) is a majority shareholder. DISH Network Corp. (NASDAQ:DISH)’s move to concentrate on Clearwire has a purpose. Even if the company buys the remaining share of Clearwire that Sprint doesn’t own, it would help the core satellite TV player to get into partnership talks with Sprint in the future. Again, if Sprint Nextel Corporation (NYSE:S) is unable to acquire Clearwire, it would be a setback for the telecom provider as it plans to use Clearwire Corporation (NASDAQ:CLWR)’s spectrum in its network deployment. It will be interesting to see how things move ahead for these players.
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Rajesh Marwah has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Dish Drops Sprint, Sets Eyes on Clearwire originally appeared on Fool.com.
Rajesh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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