Sprint Nextel Corp. (S - Analyst Report) – the third-largest wireless carrier in the U.S. – gets Institutional Shareholder Services’ (ISS) support for its plan to completely acquire its subsidiary, Clearwire Corporation .
ISS offers valuable investment decisions and corporate governance solutions to the leading financial institutions and investors. Thus, the support of such an important body will help Sprint gain favorable response from other Clearwire shareholders for complete buyout of the company.
In order to materialize its acquisition deal, Sprint requires at least 75% support from the shareholders. It is highly anticipated that the other stake holders of Clearwire, which includes major companies like Comcast Corporation (CMCSA - Analyst Report), Intel (INTC - Analyst Report) and Bright House Networks, are willingly to vote in favor of the deal as Clearwire is running at a loss.
Moreover, Clearwire requires huge cash to meet its goal to rollout 4GLTE services across 5,000 footprints by the first half of 2013. So, selling out its entire stake to its parent firm will address both the issues (shortage of cash and better marketing support from Sprint).
Likewise, Sprint will also gain from the deal as Clearwire has huge spectrum assets in the 2.5 GHz band. So, utilizing Clearwire’s spectrum, the parent firm can easily solve its spectrum crisis.
At present, Sprint holds 50.8% of Clearwire stakes and has placed a lucrative offer of $2.97 per Clearwire share. However, the offer looks quite under priced as Clearwire shares are presently trading at $3.25 per share while DISH Network Corp. (DISH - Analyst Report) has also offered a takeover bid of $3.30 per share.
Currently, Sprint has a Zacks Rank #3 (Hold).