Less than a month after wireless network operator Clearwire agreed to sell Sprint Nextel the nearly 50 percent stake in the company that Sprint does not already own, Dish Network Corporation has swooped in with a rival offer that would pay the target $3.30 apiece for its shares.
The Dish offer, announced Tuesday, comes on the heels of Sprint agreeing to pay $2.1 billion to acquire full ownership of Clearwire with an offer that valued Clearwire shares at $2.97 apiece. As The Am Law Daily has reported, Sprint became Clearwire’s majority owner in October, when the Overland Park, Kansas–based mobile carrier acquired $100 million worth of Clearwire shares from Eagle River Holdings to increase its stake in the company from 48.15 percent to 50.8 percent. That move came just days after Japanese telecommunications company SoftBank agreed to pay $20.1 billion for a 70 percent stake in Sprint.
Now, Englewood, Colorado–based Dish—which the website 24/7 Wall St. recently nominated as the worst company in the country to work for based on employee reviews and which Bloomberg BusinessWeek dubbed “the Meanest Company in America”—has entered the fray with a bid that values Clearwire at roughly $4.9 billion. That offer is subject to any deal resulting in Dish winding up with anywhere from a 25 percent stake in Clearwire to complete control of the company. The offer also contains a provision calling for Dish to pay $2.2 billion to acquire a portion of Clearwire’s wireless spectrum. The two companies would also enter into a commercial agreement under which Clearwire would provide wireless network construction and management services.
In announcing that it had received the bid, Clearwire said in a statement Tuesday the Dish offer represents “only a preliminary indication of interest.” The statement noted that due to obstacles presented by its standing agreement with Sprint—as well as that company’s current ownership interests—Clearwire has a limited ability to strike any deals with Dish. Nonetheless, the target company said its “fiduciary duties” necessitate discussing the offer with Dish.
Sprint issued its own statement Tuesday in which it claimed its offer “is superior to the highly conditional Dish proposal.” Sprint also noted in a letter to Clearwire that the latter is prohibited from selling any spectrum assets—and from entering into any commercial agreements—without Sprint’s consent.
Clearwire said a special committee of its board of directors will evaluate both the Dish proposal and Sprint’s letter before deciding on a course of action. The special committee’s approval is required to complete the deal between Clearwire and Sprint, as are the blessings of regulators and Softbank.
Sullivan & Cromwell is serving as Dish’s outside counsel on the bid, according to a source close to the matter. While an S&C spokesman declined to comment, the firm has a history of working with the satellite television provider. M&A partner Scott Miller advised Dish on its 2007 spin-off of set-top box unit EchoStar, and was among the attorneys who worked on the company’s $1.37 billion purchase of mobile company TerreStar Networks in 2011.
R. Stanton Dodge is Dish’s general counsel.
Bellevue, Washington–based Clearwire said in its announcement of Dish’s bid that it is being represented by Kirkland & Ellis. As The Am Law Daily reported in December, New York–based Kirkland corporate partners Joshua Korff, David Fox, David Feirstein, and Christopher Kitchen have been advising the company on its tentative agreement with Sprint.
(A team from Davis Wright Tremaine also advised Clearwire on the Sprint agreement. Clearwire’s general counsel, Broady Hodder, is a former Davis Wright attorney.)
Simpson Thacher & Bartlett and Delaware firm Richards, Layton & Finger are advising the special committee of Clearwire’s board. New York–based Simpson Thacher M&A partners Robert Spatt and Marni Lerner, as well as finance partner Marissa Wesely, had been advising the special committee in connection with the Sprint deal.
Dish has been primed to begin offering mobile-phone service alongside its television services since winning approval from the U.S. Federal Communications Commission to convert existing broadband spectrum for that purpose. (As The Am Law Daily has previously noted, Dish has been stockpiling satellite-telephone spectrum for several years.) Dish, which hopes to compete with the largest U.S. mobile providers—Verizon Wireless and AT&T—has also had discussions with Sprint in recent months about the possibility of a spectrum partnership that would allow Dish to offer mobile phone service through Sprint’s network, according to Bloomberg.
As we have reported, teams from King & Spalding and Skadden, Arps, Slate, Meagher & Flom have been representing Sprint on its transaction agreement with Clearwire, while Morrison & Foerster is advising Softbank.