Why Clearwire Shares Plunged
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Clearwire sank 12% today after accepting Sprint Nextel's offer to buy the remaining 50% in the company it does not already own for $2.2 billion.
So what: The deal values Clearwire at $2.97 per share and represents a 12% discount to its closing price on Monday. While the price is $0.07 "sweeter" than the bid made by Sprint last week, it's largely a disappointment for Clearwire shareholders, who were holding out for a much better deal.
Now what: The transaction is expected to close in mid-2013. "Today's transaction marks yet another significant step in Sprint's improved competitive position," said Sprint CEO Dan Hesse. "Sprint is uniquely positioned to maximize the value of Clearwire's spectrum and efficiently deploy it to increase Sprint's network capacity." So while Clearwire shares are likely all popped out, Sprint's bolstered airwave access might help drive outsized gains over time.
The article Why Clearwire Shares Plunged originally appeared on Fool.com.Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.