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Sprint's SoftBank, 'Grossly Undervalued' Clearwire Deals Won't Go Unchallenged

By Craig Galbraith
January 08, 2013 - News

**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q4 2012 or here for the biggest M&A during that time in the service provider-BSS/OSS spaces.**

Few mega-mergers get approved without a fight from those unhappy with the potential deal, so it doesn't come as a huge surprise that Sprint's pending deals with Clearwire and Japan's SoftBank have some opposition.

Crest Financial, an investment fund that owns about 8 percent of Clearwire, calls Sprint's offer for the half of the broadband provider it doesn't already own "grossly undervalued"; therefore, Crest will push regulators to step in and stop the deal, Reuters reported. The financial outfit also wants the FCC to keep Sprint from selling 70 percent of itself to SoftBank.

Crest Financial has already filed a class-action lawsuit on behalf of Clearwire's investors. Sprint is offering almost $3 per share for the remaining half of the company; and while Crest hasn't done its own value analysis, the firm's attorneys told Reuters they were basing their comments on analysts' estimates.

The argument is this: By undervaluing Clearwire's spectrum holdings, approving the deal could devalue spectrum licenses that the government auctions off in the next few years.

A Sprint spokesman told Reuters that the lawsuit lacks merit. The first hearing on the case is scheduled for next week in a Delaware court.

Sprint announced last fall that it planned to sell more than two-thirds of its company to SoftBank for $20 billion. A cash infusion from the Japanese company is making this bid for Clearwire possible. Sprint says that buying the Kirkland, Wash.-based company and its vast spectrum will help it further build out its next-generation wireless network and better compete with Verizon Wireless and AT&T.

Follow editor @Craig_Galbraith on Twitter.

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