The Street today is pondering the rather surprising decision, announced this morning, by wireless broadband provider Clearwire (CLWR) to accept Sprint-Nextel‘s (S) $2.97-per-share offer to buy out the rest of the company that it does not own.
Last week, some analysts had predicted that Clearwire’s board will not approve such a price, perhaps demanding something more like $5 per share.
The disappointment is reflected today in the drop in Clearwire shares of 43 cents, or almost 13%, at $2.94. Sprint shares are down 4 cents, or 0.6%, at $5.51. Clearwire noted in its press release that the offer “represents a 128 percent premium to Clearwire’s closing share price the day before the Sprint-SoftBank discussions were first confirmed in the marketplace on October 11.”
The deal comes with $800 million in new financing for Clearwire’s operations, to be funded by exchangeable notes, “which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share, subject to adjustment under certain conditions,” Clearwire said.
Jennifer Fritzsche of Wells Fargo, who has an Outperform rating on Clearwire stock, wrote this morning, “While this represents a discount to other valuations in the spectrum space, we believe CLWR was somewhat limited in its negotiations by fact there was only one logical buyer of the asset.”
“We also note, CLWR shares have moved 120% since the Sprint / SoftBank deal was announced in mid-October vs. an 18% move in the S&P500 during the same period.”
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