Sprint: Dish's offer to buy Clearwire violates state law
Dish's proposal to acquire Clearwire is not "actionable" as certain aspects of it violate Delaware state law, claims Sprint.
Sprint is firing off some legal salvos in its effort to stop Dish Network from acquiring Clearwire.
In a letter sent today to Clearwire's board of directors, Sprint said that Dish's acquisition proposal lacks sufficient legal grounds as certain provisions run afoul of the Clearwire Equityholders' Agreement (EHA) or of Delaware state law.
Specifically, Dish's demand for an agreement to choose at least three of Clearwire's board members and have the authority to veto certain Clearwire actions violates the EHA or Delaware law. Further, Dish's proposal asks Sprint, which already owns half of Clearwire and wants to acquire the rest, to give up certain rights. It also sidesteps a requirement that Dish and other holders of the EHA must first give their consent to the rights that Dish wants as part of its offer, Sprint added.
As a result, Sprint said it will not vote in favor of Dish's proposal, tender any of its shares, or waive any of its rights as an investor.
"The Clearwire board has a duty to all stockholders, including Sprint, and simply cannot in good faith enter into the agreements Dish requests," Sprint said in its letter. "Under the Clearwire board's duty of candor to the Clearwire stockholders, we urge you to set forth a clear position of your view on the foregoing issues as soon as possible. Many Clearwire stockholders appear to be under the mistaken belief that Dish's proposal is a viable alternative to the Sprint merger agreement and this is simply not the case."
Sprint and Dish have been duking it out to acquire Clearwire. On May 21, Sprint upped its offer for Clearwire to $3.40 per share. Last week, Dish topped Sprint with a bid of $4.40 per share.