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In a report published Wednesday, D.A. Davidson analyst Donna Jaegers reiterated an Underperform rating on Clearwire Corporation
, and slightly raised the price target from $2.97 to $3.40.
In the report, Jaegers noted, “Sprint (S -$7.39) increased its offer for CLWR today from $2.97/share to $3.40/share for the minority shares that it does not own. The special meeting of CLWR shareholders was postponed from today to May 30th. We calculate that Sprint's new offer values CLWR spectrum at $0.23 per MHz POP, which is two cents higher than the old valuation of $0.21 per MHz POP (taking into consideration the par value of the debt and off-balance-sheet spectrum leases). Using the same model, a takeout price of $8.50 would value the spectrum at $0.40 per mhz POP, which is the low end of Crest Financial's estimate of $0.40-$0.70 per Mhz POP. Although we believe the 150% premium implied in Crest's estimate is too optimistic, we assume Sprint thought it would not win the shareholder vote today with its $2.97 offer and may have to increase the offer again to get shareholder approval. CLWR still needs 75% shareholder approval for a change of control and so far Sprint has secured 64% of the vote.”
Clearwire Corporation closed on Tuesday at $3.40.
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