The Delaware Supreme Court affirmed the Chancery Court’s decision in favor of defendant Sprint in its $3.6 billion buyout of Clearwire.
In a single sentence, the Delaware Supreme Court affirmed a prior Court of Chancery decision in Sprint Corp’s. $3.6 billion buyout of Clearwire Corp. Previously, Vice Chancellor J. Travis Laster had found that Sprint presented sufficient evidence to negate a hedge fund company’s claims of breach of fiduciary duty and stock appraisal.
In the Chancery Court case, Aurelius Capital Management alleged that Sprint improperly pushed its buyout at a low price. Defense counsel retained Cornerstone Research and Dr. Scott Wallsten of the Technology Policy Institute to opine on Clearwire’s spectrum valuation.
Clearwire’s spectrum holdings were one of the major assets at issue during both deposition and trial. To value the holdings, Dr. Wallsten conducted hedonic regression analysis using data from several U.S. Federal Communications Commission spectrum auctions and controlling for a variety of important characteristics.
In his testimony, Dr. Wallsten identified several flaws in the plaintiffs’ evaluation methods. He showed that Clearwire’s 2.5 GHz spectrum holdings were worth only $0.24 per MHz-pop, compared to $0.78 per MHz-pop, as calculated by the plaintiffs’ expert.
Vice Chancellor Laster concluded that Dr. Wallsten’s valuation “aligned closely…with third-party offers for Clearwire’s 2.5 GHz-spectrum around the valuation date.” The vice chancellor added that Dr. Wallsten’s valuation also aligned with a later offer from DISH Network Corp., which initiated a bidding war after Clearwire’s shareholders rejected Sprint’s initial buyout. In his finding for Sprint, the vice chancellor opined that the plaintiffs’ expert’s result “relied on an extraordinary number of assumptions…starkly divorced from the market evidence.”