Dish Network’s Bid For Clearwire Could Be A Guerrilla Tactic: BAML

Dish Network’s Bid For Clearwire Could Be A Guerrilla Tactic: BAML

Sprint Nextel Corporation (NYSE:S) might increase its $2.97 per share proposal to acquire the remaining interest in Clearwire Corporation (NASDAQ:CLWR) it does not already own after DISH Network Corp. (NASDAQ:DISH) submitted an unsolicited bid to buy out Clearwire Corporation (NASDAQ:CLWR) for $3.30 a share.

Analysts at Bank of America Corp (NYSE:BAC) Merrill Lynch predict the recent development will concentrate on discussions whether DISH Network Corp. (NASDAQ:DISH)’s counter proposal would uplift the confidence of those who filed a complaint to stop the deal between Sprint Nextel Corporation (NYSE:S) and Clearwire Corporation (NASDAQ:CLWR).

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The analysts suggested that debates will also focus on the possibility that Sprint would increase its proposal marginally to remove litigation risk. According to them, “The financial implication of an increased bid is relatively small (roughly $75 m per $0.10 increase). While we don’t have a view of the merit of the class action lawsuit, DISH’s proposal adds to the discussion of fiduciary responsibility at CLWR.

The immediate implication of Dish Network’s counter proposal is to slow down the potential Sprint/Clearwire/Softbank merger, according to analysts. They speculated that the move might be a guerilla tactic for the company to ensure that Sprint is busy to bid over the top for PCS, while giving time for T-Mobile to advance. DISH Network Corp. (NASDAQ:DISH) are seeking to develop a partnership with T-Mobile.

The analysts also speculated that the move was a strategy for DISH Network Corp. (NASDAQ:DISH) to engage Sprint Nextel Corporation (NYSE:S) in negotiations regarding networking sharing. The company is also looking to build its AWS 4 spectrum.

Yesterday, Clearwire announced that it received a non-binding proposal from Dish Network to purchase all the shares owned by the company, approximately 24 percent for $3.30 per share. The company also offered to acquire CLWR’s spectrum for $2.2 billion, and to enter into a commercial agreement to construct, operate, maintain, and manage a wireless network AWS-4 spectrum, and new deployments of 2.5 GHz spectrum.

Clearwire Corporation (NASDAQ:CLWR) stated in its press statement that as a fiduciary , it is required to get the best offer for its shareholders.