This post was just published on ZYX Buy Change Alert.

It appears that Sprint has maneuvered successful to steal CLWR for a lot less than its fair value.  In our analysis, the probability of CLWR stock going higher is less than 15%.

Sprint (S) has entered into a definitive agreement to acquire the approximately 50% stake in Clearwire (CLWR) it does not currently own for $2.97 per share, equating to a total payment to Clearwire shareholders, other than Sprint, of $2.2B. This transaction results in a total Clearwire enterprise value of approximately $10B, including net debt and spectrum lease obligations of $5.5B. The transaction was unanimously approved by Clearwire’s board of directors upon the unanimous recommendation of a special committee of the Clearwire board consisting of disinterested directors not appointed by Sprint. In addition, Clearwire has received commitments from Comcast (CMCSA), Intel Corp (INTC) and Bright House Networks LLC, who collectively own approximately 13% of Clearwire’s voting shares, to vote their shares in support of the transaction. SoftBank has provided its consent to the transaction, as required under the terms of its recently announced merger agreement with Sprint. In connection with the transaction, Clearwire and Sprint have entered into agreements that provide up to $800M of additional financing for Clearwire in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share, subject to adjustment under certain conditions.

What To Do Now?

For those holding the stock it is a matter of personal preference.  In the pre-market the stock is trading at $3.03.  The probability of it going higher is only about 15%.  Waiting means ultimately the stock may need to be tendered to Sprint at $2.97.   In any case, no new additions should be made to this position.

Those not in the stock may not initiate a position in this stock.