8:08 p.m. | Updated Not so fast, Sprint.
On Tuesday, Dish Network made an unsolicited bid for Clearwire, the wireless network operator, a complicated offer that threatens the existing takeover deal by the company’s majority owner, Sprint Nextel.
As part of the deal, Dish would pay $ 2.2 billion for a portion of Clearwire’s valuable wireless spectrum and forge new commercial ties with Clearwire, fulfilling a vision of creating a new cellphone service provider. Dish, a satellite TV company, is also offering to pay $ 3.30 a share for Clearwire stock, 11 percent more than Sprint’s existing proposal. The bid values Clearwire’s shares at $ 4.9 billion.
Shares in Clearwire jumped more than 8 percent in after-hours trading on Tuesday, to $ 3.16, as investors apparently anticipated a bidding war for the struggling company.
Clearwire’s spectrum is the lure for both suitors.
Sprint is hoping to expand its next generation of data services. It is now building out its Long Term Evolution, or LTE, network, which can support the latest smartphones.
Dish has been steadily acquiring spectrum assets in recent years. To that end, it bought the satellite operator DBSD North America out of bankruptcy in 2011. Last month, the company won a critical regulatory ruling giving it the right to convert some satellite airwaves for cellphone service.
But Dish’s proposal for Clearwire faces significant hurdles. Sprint already owns more than 50 percent of Clearwire, and numerous agreements between the two companies would most likely prohibit the sort of commercial ties that Dish is seeking.
Sprint said the Dish proposal was “illusory” and “not viable.” “Sprint believes its agreement to acquire Clearwire, which offers Clearwire shareholders certain and attractive value, is superior to the highly conditional Dish proposal,” Sprint said in a statement.
Still, Dish and its chief executive, Charles Ergen, may be seeking to attract investors unhappy with Sprint’s offer. Several shareholders, including activist hedge funds, have declared the Sprint’s offer too low.
“If nothing else, Clearwire’s description of the Dish offer proves one thing: Sprint’s offer to purchase Clearwire’s stock is inadequate,” one of those hedge funds, Crest Financial, said in a statement.
Correction: January 9, 2013
An earlier version of the article said that the Dish proposal values Clearwire at $ 2.4 billion. It values Clearwire’s common shares at $ 4.9 billion.