Clearwire Corporation’s board of directors rejected the Sprint Nextel Corporation’s offer of $3.40 per share in favour of Dish Network Corporation’s higher offer of $4.40 per share.
The shareholder vote, which was scheduled yesterday , has also been pushed to 24 June. The board recommended the company’s independent shareholders to accept Dish Network’s offer.
Meanwhile, advisory firm Institutional Shareholder Services (ISS) also recommended the shareholders of Clearwire to vote against Sprint Nextel’s offer.
Sprint, which is the majority owner of Clearwire, will now have to increase its offer price.
This move is considered to be huge setback for Japan-based SoftBank, which has been competing with Dish to acquire the wireless carrier Sprint.
SoftBank considers Sprint-Clearwire acquisition as key for its expansion into the US.
Dish has extended its tender offer till 2 July 2013. Dish’s offer would take the total value of Clearwire to about $6.5bn.
Earlier this week, Japan-based telecom operator SoftBank Corp. raised its offer for Sprint Nextel by 7.5 per cent to $21.6bn to put an end to competing bid from Dish Network Corporation.
Jonathan Chaplin of New Street Research told the Financial Times that Dish wanted to be more than a minority shareholder in Clearwire. “We believe they want 40MHz of Clearwire spectrum and bidding for the equity gives them leverage to extract this spectrum from an unwilling Sprint/SoftBank,” he said.
Walt Piecyk, an analyst at BTIG, told Bloomberg that if Dish buys the stake in Clearwire that Sprint doesn’t own, it could force the latter to rethink whether SoftBank would be an ideal suitor.
Clearwire Corporation, through its operating subsidiaries, provides 4G wireless broadband services in the US.