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Summary:

The terms Dish wants in its bid to invest in or take over Clearwire violate Delaware state law, making the deal “not actionable”, Sprint’s lawyers maintain.

Sprint has gotten the lawyers involved in its ongoing fight with Dish Network over who will control Clearwire. On Monday, Sprint sent a letter to the Clearwire board claiming that the terms of Dish’s bid to take over part or all of Clearwire violate state laws in Delaware, where the WiMAX operator is incorporated.

Specifically Dish is demanding the right to approve three members of the Clearwire board and veto powers over certain board decisions if it invests in but doesn’t assume outright control of the company. Sprint claims that violates the terms of Clearwire’s equityholders’ agreement and the rights of other shareholders, including Sprint.

The only way to change the agreement would require Sprint’s consent, and Sprint said in its letter it would not grant it. Therefore, Sprint concluded, the proposal is “not actionable.” The Clearwire board has always leaned toward Sprint, but last week Dish played its trump card right before shareholders’ were scheduled to vote on the deal. Dish offered to pay a $4.40 a share, a full dollar more than what Sprint is offering.

The bad blood between Sprint and Dish is getting worse as the two wage M&A wars on two fronts. Sprint, which is already half-owner of Clearwire, is trying to take over the company outright, but Dish is vying for a 25 percent or greater of the WiMAX operator to ensure it will have a future place to hang its planned LTE network. At the same time, Dish is trying to buy Sprint itself, challenging SoftBank’s $20.1 billion bid to acquire 70 percent of the U.S. mobile operator.

  1. shit just got real

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