Sprint Sues to Block Dish’s Plan to Buy Clearwire

Tue, 06/18/2013 - 9:59am
Ben Munson

This article has been updated to include an updated response from Dish Network.

Sprint has filed a complaint with the Delaware Court of Chancery against Dish and Clearwire, asking the courts to put the brakes on Dish’s tender offer to Clearwire.

In a press release, Sprint said “DISH has repeatedly attempted to fool Clearwire’s shareholders into believing its proposal was actionable in an effort to acquire Clearwire’s spectrum and to obstruct Sprint’s transaction with Clearwire.”

Among Sprint’s arguments for blocking the transaction, the Kansas City-based carrier said that the Dish tender offer cannot be completed without approval from 75 percent of Clearwire’s shareholders nor without the approval of Comcast. Since neither approval has been met, Sprint said that completion of the transaction would be illegal.

Sprint also said that completion of the tender offer would give Dish veto power over certain corporate functions at Clearwire, governing rights that Sprint said would be in violation of Delaware law as well as the Equity Holders Agreement. Sprint also goes on to call Dish’s tender offer “unlawfully coercive” because it threatens to stick Clearwire’s non-tendering shareholders with stake in a company “subject to governance deadlocks or substantial damage awards to DISH if Clearwire is unable to deliver on the unenforceable promises set forth in the [Investor Rights Agreement] and [Note Purchase Agreement].”

Dish spokesman Bob Toevs responded, “Sprint’s lawsuit is a transparent attempt to divert attention from its failure to deal fairly with Clearwire’s shareholders, as well as to exploit its majority position to block Clearwire’s shareholders from receiving a fair price for their shares.  DISH is confident that its superior offer, which has been unanimously recommended by the Clearwire Board, including the majority appointed by Sprint, will be upheld and Clearwire shareholders will be free to realize the 29 percent premium represented by the DISH offer.”

Clearwire declined to comment.

Last week, Dish scored a big win in its push to buy Clearwire when its board shifted its full support away from Sprint’s acquisition offer of $3.40 per share toward Dish’s tender offer of $4.40 per share. In the balance is Clearwire’s huge chunk of 2.5 GHz spectrum, an essential part of Sprint’s Network Vision LTE plans and an emerging factor in Dish’s fixed broadband service tests with regional carrier nTelos.

Clearwire’s board is scheduled to vote June 24 on Dish’s tender offer.



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