Clearwire, Sprint, and Dish Network: The Standoff Continues
The rapidly-growing smartphone market in the United States has created a massive hunger for data. In turn, this ravenous need has caused wireless service providers to gobble up more and more spectrum to support increased bandwidth use. The result of this technological trend has been industry consolidation, and within that microcosm, Sprint (NYSE:S), Clearwire (NASDAQ:CLWR), and Dish Network (NASDAQ:DISH) have faced off, all eager to stockpile spectrum.
In December, Dish Network made a $3.30-per-share offer for Clearwire that came amidst shareholder outrage over Sprint’s $2.97-per-share proposal to buy the roughly half of Clearwire it does not already own. Clearwire is struggling financially and desperately needs access to cash, so the company is attempting secure the highest price for its shareholders. But Clearwire’s need for cash has also prompted the company to tap financing made available by Sprint, a move that could further complicate the standoff between the three companies.
Clearwire announced on Wednesday that it has decided to take the $80 million March draw that its agreement with Sprint established. The additional financing will be in the form of exchangeable notes, meaning Sprint will be given Clearwire common stock, at the price of $1.50 per share, in return. This deal, if Clearwire draws the financing, will enable Sprint to gradually expand its stake in the company…