The long, somewhat action-packed bidding war between Sprint Nextel (S) and Dish Network (DISH) over the small but much sought after wireless service provider Clearwire (CLWR) looks as though it has finally come to a conclusion, with Dish on Wednesday conceding defeat and withdrawing its offer for the company.
Dish’s standing offer had been for $4.40 per share, until late last week when Sprint in a surprise move upped the ante by offering $5 per share in a bid to purchase the 50 percent of Clearwire’s shares that it did not already own. The move was quickly endorsed by Clearwire’s board, who hastily arranged for a July 8th shareholder vote on the matter.
Dish and CEO Charlie Ergen, perhaps in an attempt to get ahead of a rapidly transforming cable television market, had seen Clearwire as part of a strategy that would give it a strong entry-point for expanding its business to the wireless market, and potentially upping revenue on the ability to sell packages of phone and cable service.
The other part of the strategy, for Dish, was the acquisition of Sprint itself, which had failed not a week before the loss of the Clearwire deal. That bidding war pitted Dish against Japanese telecom company SoftBank, and had reached a level of bitterness that is rarely seen in the world of mergers and acquisitions. Dish took out ads in Washington, D.C.-area newspapers, and had set up a website to publicize highly speculative claims about its Japanese rival’s connections to Chinese government computer hacking operations.
The two bidding contests unfolded concurrently and over a period of some five months, with each company trying to one-up the other with better and better offers. Shares for Clearwire, a firm with a market cap of $3.53 billion, have spiked 76 percent in 2013 as a result to their trading price as of Wednesday’s close of $5.09.
Clearwire is coveted for its ownership of rights to radio frequency spectrum in the range of 2.5 Ghz that is uniquely suited to the 4G network on which the exponentially important mobile phone economy depends.
Sprint, for its part, is seeking to bridge the considerable gap standing between itself and its competition in the wireless market in the U.S. Together, Verizon (VZ) and AT&T (T) more or less dominate the playing field, with T-Mobile U.S. (TMUS) in a distant fourth-place. Meanwhile, SoftBank is eager to enter the U.S. wireless market itself, and it looks as though it is well on its way to doing so.