Sprint Acquires Full Control of Clearwire in $2.2 Billion Deal
Key Takeaways
- Deal Value: Sprint secures 100% ownership of Clearwire at \(2.97 per share, totaling \)2.2 billion.
- Strategic Backing: SoftBank’s 70% investment in Sprint enabled the acquisition.
- Debt Assumption: Sprint takes on Clearwire’s $5.5 billion in net debt and spectrum lease obligations.
- Investor Support: Major stakeholders like Comcast, Intel, and Bright House Networks backed the deal.
- Spectrum Advantage: Sprint gains access to Clearwire’s valuable 2.5 GHz spectrum assets.
The Acquisition Details
Sprint has finalized its agreement to acquire the remaining shares of Clearwire for \(2.2 billion, or \)2.97 per share. This move marks a significant consolidation in the telecom industry, positioning Sprint to enhance its competitive edge against rivals like AT&T and Verizon. The deal, contingent on the completion of SoftBank’s 70% investment in Sprint, is expected to close by mid-2013.
Financial Implications
- Premium Pricing: The $2.97 per share offer represents a 128% premium over Clearwire’s closing price before SoftBank’s involvement and a 40% premium over the price prior to Sprint’s initial interest.
- Debt Load: Sprint will assume Clearwire’s $5.5 billion in net debt and spectrum lease obligations, a critical factor in the deal’s total cost.
Investor and Stakeholder Dynamics
Clearwire’s major shareholders, including Comcast, Intel, and Bright House Networks (collectively owning 13% of the company), have thrown their support behind the deal. Additionally, Clearwire secured \(800 million in financing through exchangeable notes, with Sprint committing to purchase \)80 million worth starting January 2013, pending certain conditions.
Strategic Benefits for Sprint
Spectrum Expansion
Sprint gains access to Clearwire’s extensive 2.5 GHz spectrum holdings, a valuable asset for expanding its network capacity and improving service quality.
Network Enhancement
Clearwire’s TD-LTE network, though different from Sprint’s existing LTE infrastructure, will complement Sprint’s efforts to roll out next-generation coverage. This synergy is expected to bolster Sprint’s competitiveness in the U.S. telecom market.
Looking Ahead
The acquisition underscores Sprint’s commitment to strengthening its market position through strategic investments. With Clearwire’s spectrum and network capabilities under its umbrella, Sprint is poised to deliver faster, more reliable services to its customers.
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