Published December 18, 2012
Sprint Corp promised to pay Clearwire Corp a $120 million breakup fee if its $2.2 billion purchase of roughly half of the smaller wireless service provider does not go ahead but it restricted Clearwire's ability to entertain other offers.
Sprint, the majority owner of Clearwire, announced details of its purchase agreement in a regulatory filing on Tuesday, the day after it said it would buy out the rest of Clearwire for $2.97 per share.
Clearwire shares were below the offer price at $2.88 in morning trade.
Some shareholders said they were disappointed by the price, which requires approval from a majority of Clearwire's minority shareholders. While one shareholder is looking for support for a class action lawsuit against the deal, another is still holding out hope for a higher bid.
But Sprint said in the filing that Clearwire had agreed to a no-shop restriction of its ability to solicit other offers.
It also said that Clearwire would be restricted from providing information to or engaging in discussions or negotiations with third parties regarding an acquisition proposal, subject to certain exceptions.
It did not disclose the potential exceptions to the rule.
The Clearwire deal is conditional on the sale of a 70 percent stake in Sprint to Japan's SoftBank Corp for $20 billion, which is expected to close around mid-2013.
Sprint would have to pay the breakup fee if the SoftBank deal does not happen, if it or Clearwire terminates the agreement, or if their deal has not been consummated on or before October 15, 2013, according to the filing.
The merger agreement also includes a "no-shop" restriction on Clearwire's ability to solicit acquisition proposals.
Sprint has support for the deal from at least three Clearwire shareholders owning 13 percent of the company - Intel Corp, Comcast Corp and cable company Bright House.
Clearwire shares were down 3 cents or 1 percent at $2.88 in morning trade on Nasdaq. Sprint stock was down 8 cents or 1.4 percent at $5.48 on New York Stock Exchange.
(Reporting by Sinead Carew; Editing by Lisa Von Ahn and Nick Zieminski)