Sprint Offers $2.1 Billion To Purchase Full Stake In Clearwire

Sprint Wireless has offered to pay $2.1 billion in order to acquire all outstanding shares of Clearwire. In October 2012, Sprint acquired a controlling stake in the company after purchasing $100 million worth of shares from an investment firm.

By purchasing Clearwire, Sprint would gain more access to wireless spectrum space, which in turn would allow the company to grow its 4G systems at a more rapid rate. Wireless spectrum is required to build out ultra-high speed mobile data networks and is ultimately needed to compete with the likes of AT&T Wireless and Verizon Wireless.

Should the deal be approved, Sprint Wireless would pay a 5.5 percent premium or $2.90 per share.

Clearwire was originally started as a $3.2 billion venture that include such partners as Google, Intel, Comcast, and Time Warner Cable among others. The consortium of companies involved with Clearwire had hoped to turn the telecommunications industry on its head. Instead of success, Clearwire lost $1 billion in 2012.

To finance the $2.1 billion buyout, Sprint would provide Clearwire with $800 million in interim financing to keep the company moving forward. Sprint would use money from the recent Softbank buyout, which infused the wireless carrier with nearly $20 billion while handing Softbank a 70 percent stake in the American wireless provider.

Many analysts believe that Softbank acquired Sprint Wireless in the hopes of picking up more wireless spectrum at a later time. Softbank was likely eyeing Sprints relationship with Clearwire as the most likely acquisition ahead of its Sprint purchase.

Do you think the Sprint-Clearwire deal makes sense?