Sprint Nextel Corporation (NYSE:S) closes the three-way deal with Cleanwire and SoftBank

Denver, CO, 07/10/2013 (Avauncer.com) – Shares of Sprint Nextel Corporation (NYSE:S) fell 1.26% to close at $7.07 in the last trading session. The shares however stayed at the upper end of their 52-week price range of $3.15 to $7.50. However, shares of Sprint remained the hottest in the market, with 590.61 million shares exchanging hands, against 68.88 million shares traded on average. This was in the backdrop of a three-way merger underway between SoftBank, Sprint and Clearwire Corp. In latest reports, Sprint announced that more than half of its shareholders chose to receive cash in the deal. The part of these shareholders that will receive cash exceeded the pre-decided limit of $16.64 million. The large number of shareholders opting for cash highlights the reluctance of current shareholders to remain invested in the company, opting to take cash and exit.

Shareholders will now receive about $5.65 in cash along with 0.26174408 shares in the new company for each existing share in Sprint. The deal aims at providing the carrier with funds to enlarge the coverage area of its wireless network and compete effectively with its competitors AT&T Inc. (NYSE:T) and Verizon Wireless.

The closure of transactions brings an end to a long negotiation that began with SoftBank’s agreement with Sprint in October. This was followed by a separate deal between Cleanwire and Sprint in December. However, Dish Network Corp. (DISH) made competitive offers but was not able to break the deal; it however forced SoftBank to increase its offer price.

Share prices declined as a result of the high percentage of shareholders who opted for cash. Moreover, the shares remained inactive in their premarket trading, further indicating lack of investors’ confidence around the deal and its effect on the company’s financials.