Sprint, the No. 3 wireless telecom carrier, is offering to buy the rest of rival Clearwire it doesn't own, signaling consolidation of a fast-growing area of technology.
A Sprint Nextel cell phone store on Oct. 15, 2012 in Miami, Fla. (Photo: Joe Raedle, Getty Images)
The buyout is worth $2.90 a share, a considerable premium from Clearwire's $2.75 a share closing price Wednesday.
The move, where Sprint (S) is buying the remaining 49% of Clearwire (CLWR) it didn't already own, comes just months after Sprint got a $20.1 billion cash infusion from Japan's Softbank in exchange for a controlling stake.
The Clearwire buyout, which had been rumored, was confirmed in a regulatory filing with the SEC. Clearwire's board must evaluate the offer.
Clearwire was struggling financially as it faced large costs to upgrade its network to keep up with fast mobile Internet speeds, now common on networks from larger players like Verizon, AT&T, Sprint and T-Mobile.
Sprint is a distant third with 56 million subscribers, behind AT&T with 105 million and Verizon with 94.2 million, according to The Associated Press.
Sprint uses Clearwire's network to provide "Sprint 4G," but it's building its own 4G network at the same time.
Earlier this week, shares of Clearwire spiked after CNBC and The Wall Street Journal, citing unnamed sources, said an offer was in the works.
Sprint Nextel, based in Overland Park, Kan., rolled part of its own operations into Clearwire in 2008, gaining a stake of just over 50%. But Clearwire's weak financials threatened to drag Sprint down with it, and Sprint reduced its stake to less than 50%.
Source: USA Today | The AP