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Dish Abandons Sprint Bid to Focus on Clearwire Deal

Charlie Ergen
Alex Wong/Getty Images
Charlie Ergen, co-founder and chairman of Dish Network.

Analysts say the company, led by chairman Charlie Ergen, could use a stake in the wireless broadband firm to strike a partnership to expand its services.

Charlie Ergen's Dish Network has all but abandoned its bid for wireless giant Sprint Nextel.

That means that Japan's SoftBank will likely end up acquiring the third-largest U.S. wireless carrier whose shareholders will vote on a deal on Tuesday.

But Dish continues to look to acquire at least a big minority stake in wireless broadband provider Clearwire via a tender offer for its stock.

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"While Dish continues to see strategic value in a merger with Sprint, the decisions made by Sprint to prematurely terminate our due diligence process and accept extreme deal protections in its revised agreement with SoftBank, among other things, have made it impracticable for Dish to submit a revised offer by the June 18th deadline imposed by Sprint," Dish said late Tuesday.

Added the satellite TV giant: "We will consider our options with respect to Sprint and focus our efforts and resources on completing the Clearwire tender offer."

Dish had in April made a surprise $25.5 billion bid for Sprint. Last week, Sprint ended deal talks with Dish, instead supporting a sweetened $21.6 billion bid from Softbank. But the company gave Dish until the end of Tuesday to submit its best and final offer.

Wall Street observers have said that Dish could use a minority stake in Clearwire as a way to buy spectrum or to reach a wireles snetwork partnership.

Wells Fargo analyst said last week that Ergen could live without Sprint, but Clearwire was key for him. "We aren't convinced that acquiring Sprint is Charlie's end game," she said. "His focus seems to be on Clearwire spectrum and a partnership with a network host. Perhaps he just uses Clearwire's WiMax network."

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Ergen has been looking to enter the wireless business and previously acquired U.S. wireless spectrum. While the Dish chairman hasn't detailed his plans, analysts say he is betting on continuing growth in tablet and smartphone mobile video usage.

Clearwire's current owners include Sprint, which holds a majority stake, Comcast and Time Warner Cable.

Sprint has sued to end Dish's $4.40 per share offer for stock held by minority owners of Clearwire, alleging it violates Delaware law and the rights of Sprint and other strategic investors.

But the Clearwire board has supported the tender. "Dish is confident that its superior offer, which has been unanimously recommended by the Clearwire board, including the majority appointed by Sprint, will be upheld and Clearwire shareholders will be free to realize the 29 percent premium represented by the Dish offer," Dish said a few days ago.

Email: Georg.Szalai@thr.com
Twitter: @georgszalai