DealBook: Dish Says It Won’t Submit a New Offer for Sprint

Andrew Kelly/ReutersA Sprint store in New York.

Dish Network said on Tuesday that it would not submit a new takeover bid for Sprint Nextel ahead of a deadline imposed by the company and would instead focus on its bid for a stake in Clearwire, a smaller wireless operator. That appeared to leave Sprint free to complete the sale of a majority stake to SoftBank of Japan for $21.6 billion.

In a statement, Dish said that it still saw merit in a merger with Sprint, which would help it move into cellphone service. But conditions imposed by Sprint’s revised bid with SoftBank made it “impracticable” to put together a counter bid ahead of the 11:59 p.m. deadline.

Among those requirements, which Dish criticized as “extreme deal protections,” were a shareholder rights plan that limited outside investors other than SoftBank from owning more than 17 percent of Sprint and a demand that any rival bid have fully committed financing.

“We will consider our options with respect to Sprint, and focus our efforts and resources on completing the Clearwire tender offer,” Dish said in a statement. Representatives for Sprint and SoftBank did not have immediate comment.

The revised proposal with SoftBank made it more difficult for Dish to compete. One of Sprint’s biggest shareholders, the hedge fund Paulson & Company, has publicly lent its support to the offer.

While Dish may still be weighing a last-minute way to stymie SoftBank, it has a stronger path to victory by pursuing its bid for Clearwire. Last week, Clearwire endorsed Dish’s offer to pay $4.40 a share, switching from Sprint’s proposal of $3.40 a share.

While Dish cannot buy all of Clearwire — Sprint already owns about 50 percent, and is set to raise that stake to about 65 percent through agreements with other big shareholders — it stands to gain a significant say in the governance of the company. And it will have additional leverage with Sprint.

That matter is not resolved yet. Sprint sued Dish and Clearwire in Delaware’s Court of Chancery on Monday in an effort to block their deal, contending that the transaction violates an existing shareholder rights agreement.