Sprint Wireless has confirmed plans to purchase 4G mobile data provider Clearwire. The deal was first rumored last week with an estimated purchase price of $2.1 million. Sprint and Softbank discussions began on October 10, the buy price for Clearwire shares at that time would be a 128 percent premium based on today’s acquisition offer.
According to Sprint officials the actual buy cost is slightly higher than expected at $2.2 billion.
As part of the deal Sprint will provide Clearwire with up to $800 million in financing through exchangeable notes. The notes will be exchangeable if certain conditions are met and will be valued at Clearwire common stock prices of $1.50 per share. The exchangeable notes will be issued at $80 million per month for up to 10 months.
When Softbank agreed to purchase a controlling stake in Sprint Wireless the company said it planned to expand Sprint’s network. Many analysts at that time believed Clearwire would be a likely target for that expansion. By purchasing Clearwire, Softbank gains immediate access to more valuable spectrum space to increase Sprint’s reach and internet speeds.
Clearwire controls 2.5GHz spectrum access, an important piece of spectrum real estate that will better allow Sprint to compete against its main competitors, namely AT&T Wireless and Verizon Wireless.
The Sprint Wireless acquisition of Clearwire is hardly a done deal, first both company’s must convince a majority of Clearwire stockholders to accept the move and second the Softbank acquisition of Sprint Wireless must be completed.
With wireless spectrum often fetching billions of dollars through open market auctions Sprint Wireless could win not only through its spectrum acquisition but also by acquiring talented workers from an established mobile data provider which relies on its own in-house systems to operate.
Do you think Sprint Wireless will greatly benefit from the acquisition of the Clearwire network and its 2.5Ghz spectrum space?
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