Dish Network Faces Lawsuit Due To Clearwire Takeover Bid

Dish Network Faces Lawsuit Due To Clearwire Takeover Bid

A lawsuit was filed by Sprint Nextel Corp (NYSE:S) against Clearwire Corp (NASDAQ:CLWR) and Dish Network (NASDAQ:DISH) to stop the acquisition of the wireless broadband provider by Dish.

The lawsuit, which was filed at the Delaware Court of Chancery, indicated that the tender offer of Dish violated the rights of the shareholders of Sprint and Clearwire as well as laws in Delaware. It aims to stop Clearwire from agreeing to the offer of Dish. According to a statement from Sprint, Dish tried to deceive the shareholders of Clearwire into accepting the proposal. It also aims to block the transaction of Sprint with Clearwire.

An announcement by Sprint last year indicated that an agreement was made between Sprint and Clearwire for acquiring fifty percent of the company that Sprint does not already own at $2.2 billion or $2.97 for each share. However, Dish Network made its own offer for Clearwire at $5.15 billion or $3.30 for each share.

The proposal of Sprint was revised to $3.40 for every share, which was considered as the best offer of Sprint. Prior to a stockholders vote on the proposal of Sprint, another offer was tendered by Dish Network, which was $1 higher than the offer of Sprint.

This resulted to a recommendation from the board of directors of Clearwire to the shareholders of the company to accept the offer of Dish. A special stockholders meeting was scheduled to vote on the offer of Dish.

Seventy-five percent of the outstanding voting shares of Clearwire and approval from Comcast are required for the deal to be completed. The lawsuit indicated that these two requirements were not satisfied. Sprint also indicated that the corporate law in the state of Delaware will be violated by the deal since it gives Dish the power to veto corporate decisions, which is normally given to shareholders or directors.

Dish Network is also currently trying to acquire Sprint, which also received an offer from SoftBank.

Posted by James Fried on Wednesday June 19 2013, 4:50 AM EDT. Ref: CNET. Link. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0