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Sprint raises Clearwire bid, wins key investor support

People walk past a Sprint store in New York December 17, 2012. REUTERS/Andrew Kelly
People walk past a Sprint store in New York December 17, 2012. REUTERS/Andrew Kelly

By Sinead Carew

NEW YORK (Reuters) - Sprint Nextel Corp raised its buyout offer for Clearwire Corp to $5 per share on Thursday and announced support from a key group of dissident shareholders, likely ending a bitter battle with rival suitor Dish Network Corp.

Sprint, currently Clearwire's majority shareholder, has been fighting publicly with Dish over Clearwire since January as both companies want Clearwire's vast trove of valuable wireless airwaves to help them compete in wireless services.

Clearwire put its support behind the latest offer, representing the second major blow in a matter of days against Dish Chairman and founder Charlie Ergen, who wants to expand his satellite TV company into the wireless market.

Earlier this week Ergen had to back out, at least for now, from a battle with Japan's SoftBank Corp to buy Sprint itself.

Dish declined comment on the new Clearwire offer.

Several analysts said they now expect Sprint to prevail.

"We believe Clearwire shareholders will approve the $5 offer from Sprint regardless of any new overtures from Dish," said BTIG analyst Walter Piecyk.

On top of the higher price, which gives Clearwire an enterprise value of more than $14 billion - or a roughly 14 percent premium over Dish's bid, Sprint also had Clearwire change its governance rules making it harder for a rival bidder.

The changes include a break-up fee of $115 million that Clearwire would have to pay if the latest deal fails.

Clearwire shares closed up 34 cents, or 7 percent, at $5.04 on Nasdaq. Sprint shares rose 7 cents, or 1 percent, to $7.07 on the New York Stock Exchange.

MONTHS OF PRESSURE, INTENSE NEGOTIATIONS

The improved offer was the result of months of pressure from Clearwire shareholders as well as two rival bids from Dish, which first offered $3.30 per share for Clearwire in January.

Clearwire had recommended last week that shareholders accept Dish's more recent $4.40 per share offer for their shares and vote against Sprint's May offer of $3.40 per share.

Sprint said it now has support from shareholders with 45 percent of Clearwire's minority shares, just shy of the more than 50 percent it needs to take over the company.

For example, it said it has commitments from a group of four activist shareholders that own about 9 percent of Clearwire's voting shares to support the deal.

Clearwire Chief Executive Erik Prusch said he was confident the deal can win over enough shareholders.

"That's completely different to where we were a short time ago," said Prusch who said the offer ended several days of intense negotiations between Sprint and Clearwire. Clearwire's efforts were led by Dennis Hersch, the head of its special committee, and John Stanton, Clearwire's chairman.

"The difference with this is that it comes with the validation of a group of our minority shareholders," Prusch said.

The group of four shareholders - Mount Kellett Capital Management LP, Glenview Capital Management LLC, Chesapeake Partners Management Co, Inc and Highside Capital Management LP - had publicly complained about Sprint's offer priced and teamed up to negotiate for a higher price.

The latest offer was the third time Sprint raised its bid since its first December offer to buy Clearwire's minority shares for $2.90 each.

The latest Sprint offer came just days before Clearwire shareholders were expected to vote down its previous $3.40 per share offer.

Clearwire postponed a June 24 shareholder vote until July 8 to give shareholders time to review the new offer.

Shareholders had complained that Sprint's previous offer was too low even before Dish made its counterbid at the end of May. Analysts and investors told Reuters that Sprint would need to raise its bid or risk a contentious relationship with Dish as a minority shareholder.

(Reporting by Sinead Carew; Editing by Gerald E. McCormick, Richard Chang and Bernard Orr)

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