OVERLAND PARK, Kan. – Sprint is suing to stop Dish Network’s buyout of wireless data network operator Clearwire. The nation’s third-largest cellphone carrier said the proposed deal violates the rights of Sprint and other Clearwire shareholders.
Dish has offered to pay $4.40 per share for Clearwire, which has recommended that its shareholders approve the offer. That reverses its earlier stance in support of a takeover bid by Sprint, its majority shareholder.
Sprint, headquartered in Overland Park, Kan., has bid $3.40 per share for the minority stake in Clearwire it doesn’t already own.
Dish Network Corp., based in Englewood, Colo., a satellite broadcaster, has said its offer is contingent on being able to buy 25 per cent of the company.
But Sprint Nextel Corp. said late Monday that Dish cannot complete its offer without the approval of holders of at least 75 per cent of Clearwire’s shares. Sprint also contends that the deal violates shareholder rights under Clearwire’s charter and an equity holders’ agreement.
Sprint’s complaint, filed in the Delaware Court of Chancery, asks the court to prevent Dish’s offer from being consummated. Clearwire is incorporated in Delaware.
Dish called the litigation a “transparent attempt” by Sprint to divert attention away from its failure to deal fairly with Clearwire shareholders. The satellite broadcaster said in a statement it was confident its offer will be upheld.
Clearwire said it doesn’t comment on pending litigation.
Earlier this month, Sprint had sent an open letter to Clearwire’s board saying the conditions of Dish’s offer are illegal and violate Clearwire Corp.’s shareholder agreement. But Dish said in a separate letter that its offer was “carefully designed to comply with applicable law and the existing rights of Clearwire stockholders including Sprint.”
Clearwire Corp. is based in Bellevue, Wash.
Shares of Sprint rose 7 cents to $7.29 in Tuesday afternoon trading, while Dish rose 38 cents to $39.21 and Clearwire fell 2 cents to $4.62. Broader trading indexes, meanwhile, were up less than 1 per cent.