Here’s How Sprint Will Gain Control of Clearwire

The roller coaster continues for Clearwire (NASDAQ:CLWR), as shares drop as much as 10 percent in pre-market trading. The company pushed up against 52-week highs on Tuesday as speculation mounted that Sprint (NYSE:S) would buy the Clearwire in the wake of its deal with Softbank, but dropped on news that further mergers and acquisitions would need to be delayed until the deal was complete.

In order to dodge complications related to a traditional acquisition and secure voting power, Sprint has announced that it will buy an additional 5 percent stake in the company from Craig McCaw and his holding company for $100 million. The move pushes Sprint’s share past 50 percent and effectively gives it control of the company, securing access to Clearwire’s valuable spectrum holdings.

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The deal solves some issues in the sometimes tenuous relationship between the two companies. Clearwire has traditionally lacked the cash to fully utilize its technology and build out its network. Earlier investments from Comcast (NASDAQ:CMCSA), Intel (NASDAQ:INTC), and Google (NASDAQ:GOOG) have largely fallen short of expectations as Clearwire lagged behind major competitors like Verizon (NYSE:VZ) and AT&T (NYSE:T).

With $8 billion in primary capital falling into Sprint’s hands as part of its deal with Softbank, the company will be able to finally build out its network and step up to the plate with the other major players.

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