Clearwire Committee Likes Sprint Offer Best

Clearwire has released the full text of a letter sent today to shareholders regarding the company’s transaction with Sprint.

May 6, 2013:

On May 21, 2013, Clearwire will hold a Special Meeting of Stockholders to vote on the proposed Sprint transaction. Clearwire stockholders of record as of the close of business on April 2, 2013, are entitled to vote at the Special Meeting.

PROPOSED TRANSACTION WITH SPRINT PROVIDES THE BEST STRATEGIC ALTERNATIVE FOR CLEARWIRE’S MINORITY STOCKHOLDERS AND REPRESENTS FAIR, ATTRACTIVE AND CERTAIN VALUE

Clearwire’s board of directors has always been committed to considering strategic options and pursuing those that maximize stockholder value. A Special Committee conducted a careful and rigorous review of all options available to Clearwire, with the assistance of independent financial and legal advisors.

On the unanimous recommendation of the Special Committee, the Clearwire board has unanimously concluded that the proposed transaction with Sprint is the best strategic alternative for stockholders, representing fair, attractive and certain value, especially in light of the Company’s limited alternatives and the well-known constraints of its liquidity position.

The proposed $2.97 per share offer price equates to a total payment to Clearwire minority stockholders of approximately $2.2 billion. This transaction represents a total Clearwire enterprise value of approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion. Additional benefits include:

• _Attractive spectrum value of $0.21 / MHz – POP;
• _A ~130% premium to Clearwire’s closing share price on October 10, 2012, just before Sprint publicly acknowledged its merger discussions with SoftBank, and Clearwire was speculated to be part of that transaction;
• _A 40% premium to the closing share price on November 20, 2012, the day before Clearwire received Sprint’s $2.60 per share initial non-binding indication of interest;
• _Higher certainty of value for stockholders compared to other alternatives; and
• _Immediate liquidity to stockholders at transaction close.

SPRINT PROPOSAL WAS THOROUGHLY EVALUATED BY CLEARWIRE’S BOARD OF DIRECTORS AND SPECIAL COMMITTEE

Clearwire formed a Special Committee, comprised of three directors independent from Sprint. Clearwire’s Special Committee hired its own legal and financial advisors to evaluate and negotiate the Sprint transaction. Specifically, the Special Committee:
• _Rejected Sprint’s initial indication of interest of $2.60;
• _Oversaw subsequent negotiations, leading to an increase in the offer price of 14% and other more favorable terms; and
• _Received a fairness opinion from its financial advisors that the $2.97 merger consideration was fair, from a financial point of view, to the Company’s non-Sprint stockholders.

In addition to the actions taken by the Special Committee outlined above, the Board hired its own separate, independent legal and financial advisors and received a fairness opinion stating that the $2.97 merger consideration was fair, from a financial point of view, to the Company’s non-Sprint stockholders.

The $2.97 per share consideration represents a substantial premium to the price received by other sophisticated investors in recent transactions. For example, Google received $2.26 per share for its Clearwire Common Stock on March 1, 2012, and Time Warner received $1.37 per share for its Clearwire Common Stock on October 3, 2012.

Sprint offered to buy Clearwire in December for $2.2 billion but satellite TV provider Dish Network Corp announced a counterbid of $2.3 billion in January. The Sprint Buyout of Clearwire was also fought by some shareholders. Dish followed up in April by making a bid for Sprint.

Clearwire said in February it would evaluate Dish’s bid but continued to recommend Sprint’s offer.

Posted by Sam Churchill on .

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