Dish Network has often been invoked as possible savior/partner of ailing WiMAX provider Clearwire, but when the Clearwire accepted Sprint’s $2.2 billion buyout offer in December that seemed to dispel in notions of a Clearwire-Dish 4G union. Not so fast.
It appears that Dish wants in on any possible deal and might even be angling to purchase the WiMAX operator completely. On Tuesday, Clearwire announced that Dish made an unsolicited offer of $3.30 a share to buy part or all of the company as well purchase a quarter of Clearwire’s spectrum and enter into a network sharing agreement.
On the low end Dish would accept a 25 percent share as long as its interests were protected on the board, but according to the proposal it would be willing to acquire all of the company’s shares, paying a price roughly 11 percent greater than Sprint’s $2.97-per-share offer.
What does all this mean? If you ask spectrum policy analyst Tim Farrar, he’d say this is posturing in a high stakes game of chicken played out by some of the biggest companies in the telecom industry. He pretty much called this scenario last month, when Sprint first made overtures to Clearwire.
According to Farrar, Sprint wasn’t really interested in acquiring Clearwire; Sprint didn’t want anyone else to buy Clearwire, in particular Dish. By submitting a low-ball offer Sprint would either get Clearwire on the cheap or at least tie up the company for months as shareholders debated the offer, which would have the same effect as blocking any Clearwire-Dish deal.
So is Dish now calling Sprint’s bluff? That could be the case, but when I reached out to Farrar he said Dish has little chance on the success. Dish may be offering a higher price, but it doesn’t necessarily mean it’s offering a better overall deal, he said. What this will do is give Clearwire’s shareholder’s motive to challenge the Sprint deal. To put it another way, Dish chairman Charlie Ergen may just be out for a little payback. According to Farrar:
“… it’s hardly surprising that Charlie Ergen is seeking revenge by intervening in Sprint’s proposed Clearwire takeover. It’s hard to see how DISH could win, when Sprint already controls a majority of Clearwire’s equity, but Ergen has given Clearwire’s minority shareholders a lot more ammunition for their fight against the Sprint offer. The court battle by the minority shareholders could take months to resolve, and it seems that Sprint is determined to fight, because there is little chance that offering a few cents more per share would placate the shareholders.”
What happens next? Who knows. I’ll be the first to admit I have no idea what these companies are angling at, and I would be highly skeptical of anyone who says otherwise, unless they happened to be in the Sprint, Dish, Clearwire or Softbank inner circles.
It will be an interesting (and very confusing) next few months.