Sprint Nextel Corporation (NYSE:S) annnounced Tuesday that it plans to pay Clearwire Corporation (NASDAQ:CLWR) a $120 million breakup fee in a regulatory filing, a day after it reached a deal to buy out the 49 percent of the company that it had not already owned for $2.2 billion.
This deal is a collateral to the deal with Japan’s SoftBank and conditioned to the sale of a 70 percent stake in Sprint Nextel Corporation (NYSE:S) to Japan’s Softbank Corp for $20 million, which is expected to be concluded in the middle of year 2013. This price requires approval from a majority of Clearwire’s minority shareholder, some of them have expressed their disappointment with the deal price.
Warren Buffett’s 2018 Activist Investment
Most investors are aware of Warren Buffett's most high profile long-term investments. However, there is one long term investment that is often overlooked. Q2 2020 hedge fund letters, conferences and more This is building materials maker USG, which was owned by Berkshire Hathaway for more than 17 years before it was acquired in 2018. If Read More
According to the regulatory filing, Sprint has promised to pay the breakup fee if;
- SoftBank deal does not become a success
- Sprint of Clearwire terminates the agreement, or
- The deal does not mature on/before October 15,2013
Sprint Nextel Corporation (NYSE:S) also mentioned in the filing that as part of the merger agreement, Clearwire had agreed to a no-shop restriction of its ability to solicit other offers.
According to the regulatory filing, subject to some exceptions, Clearwire Corporation (NASDAQ:CLWR) will be restricted from extending information to or engaging in negotiations with third parties regarding any acquisition proposal.
However, the filing didn’t reveal any potential exception to this rule.
At least 3 Clearwire Corporation (NASDAQ:CLWR) shareholders owing 13 percent of the company are supporting Sprint in the deal, while the company is yet to receive the approval of the rest of the shareholders. One of the stake holders is reportedly seeking support for a class action lawsuit against the deal, expressing disappointment in the deal’s price. Intel Corporation (NASDAQ:INTC), Comcast Corporation (NASDAQ:CMCSA) and Bright House are the ones holding a collective stake of 13 percent in Clearwire.
Clearwire Corporation (NASDAQ:CLWR) shares were down 3 cents or 1 percent at $2.88 in morning trade on Nasdaq. While Sprint stock was down 8 cents or 1.4 percent at $5.48 on New York Stock Exchange.