Sprint (S) in Talks to Acquire Rest of Clearwire (CLWR)

Shares of Sprint Nextel Corporation (S: Charts, News) closed down -0.09 or -1.59 percent to $5.57 per share on Tuesday after news that the company was in private talks with wireless partner Clearwire Corp. (CLWR: Charts, News) that could lead to Sprint buying out Clearwire's minority shareholders for the 49 percent of Clearwire stock Sprint does not yet own.

The deal, which is expected to be announced by year's end, follows Sprint's October agreement with Eagle River Holdings LLC, which had Sprint buy Eagle River's 4.5 percent stake in Clearwire for $2.97 per share. Clearwire stock closed up +0.28 or +11.67 to $2.68 per share on Tuesday after the news. Daily Chart
Sprint Nextel Corporation is a holding company operating a variety of wireless network services in the United States, the U.S. Virgin Islands and Puerto Rico with a customer base of approximately 55 million. In 2006, the Sprint Corporation merged with wireless provider Nextel Communications forming the present company. In 2008, Sprint Nextel merged its WiMAX wireless broadband unit with Clearwire, which led to the acquisition of 50.8 percent of Clearwire by Sprint Nextel through a joint venture with Google (GOOG: Charts, News), Time Warner Cable (TWC: Charts, News) and Intel (INTC: Charts, News). Google and Time Warner have since sold their stakes for a fraction of their original investment. In 2011, Sprint Nextel announced it would pay $1 billion to use Clearwire's 4G WiMax network through 2012. The deal for Sprint to acquire the remaining 49 percent of Clearwire could run into complications due to a bid for a 70 percent majority ownership of Sprint by Japanese carrier SoftBank made in October, worth approximately 20 billion. The Clearwire deal might be made pending the Softbank acquisition of Sprint. Last month, Sprint announced it would delay filing a proxy statement for the Softbank deal until December 21st, which will allow Sprint to continue its dialogue with Clearwire. The filing may be postponed even further depending on the progress of talks with Clearwire's shareholders. The tentative deal must also be approved by Clearwire's shareholders, which include Intel, Bright House and Comcast (CMCSA: Charts, News). Because of the complexity of the relationship between Sprint and Clearwire, a price for the 488 million shares of publicly held Clearwire stock has not yet been determined. Clearwire has a large customer base in the United States, operating in 88 markets which cover a potential 134 million subscribers. Clearwire also owns the rights to radio frequency spectrum in the 2.5 GHz range providing service using the 4G 802 16e mobile WiMAX standard. Clearwire also provides wireless services in Belgium and Spain. Sprint taking control of Clearwire's resources and reserves of spectrum will vastly improve its position in the United States wireless market and give it a more favorable place to compete with industry leaders Verizon Wireless (VZ: Charts, News) and ATT (T: Charts, News). Nevertheless, Sprint will be challenged to bring Clearwire's debt load and losses onto its balance sheet, which will be considerably easier given the $8 billion that the Softbank deal will add. If progress is made and both deals go through, the success could be reflected in Sprint Nextel Corporation's stock price. Other News About S Sprint Seeks FCC Approval For Softbank Deal Sprint files application with the FCC for Softbank deal. Sprint Playing Crucial Role in Softbank's 30-Year Grand Plan Masayoshi Son expects the Sprint deal to make the Softbank name recognized worldwide. Other Stocks in the News Disney Made a Horrible Mistake Article on Disney Netflix deal. Apple Not Seen Paying Special Dividend With Cash Overseas Apple could have problems paying out a special dividend with its cash overseas. Copyright 2012 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Dec 12, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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