In a filing today with the Securities and Exchange Commission, Sprint Nextel Corp. (NYSE: S) said that it will buy some 34 million shares of Clearwire Corp. (NASDAQ: CLWR) from Eagle River Holdings, giving the telecom company a 50.8% stake in Clearwire. Eagle River Holdings is owned by Craig McCaw, founder of Clearwire.
The purchase will give Sprint control of Clearwire, and most important, control of its sizable and valuable spectrum holdings. The purchase is related to SoftBank's acquisition of 70% of Sprint in a deal worth $20 billion. SoftBank reportedly made control of Clearwire a condition of its acquisition of its majority stake in Sprint.
SoftBank is interested in Clearwire because the Japanese firm is building a high-speed network in Japan that uses the same technology as Clearwire is using to convert its WiMax network to LTE.
Clearwire shareholders are likely to be further disappointed by the deal. Shares jumped more than 25% on Monday as investors bet that Sprint or SoftBank would acquire Clearwire outright. When that hope was dashed, Clearwire stock gave back all its gains.
Sprint's deal for the additional Clearwire shares is complicated because other shareholders in Clearwire could make a counteroffer for Eagle River's shares. Sprint is offering to pay about $2.97 a share for Eagle River's shares.
And today Clearwire shares are falling again, down 7.5% in premarket trading at $2.26 in a 52-week range of $0.83 to $2.96.
All is not lost for Clearwire shareholders, though, if they are patient. SoftBank could still acquire the company once the deal for Sprint is completed in the middle of next year.