Sprint launches legal attack, says Dish attempted to ‘fool’ Clearwire shareholders in ‘bad faith’ bid

sprintWell, nearly everyone saw this coming. Sprint has turned to the courts to try to stop Dish Network’s purchase of Clearwire, the Bellevue-broadband wireless company that’s highly coveted for its wireless spectrum.

In a lawsuit filed today against Dish and Clearwire, Sprint argues in the 45-page document that Dish’s proposed buyout violates Delaware Corporate Law and the rights of Clearwire’s strategic investors. The suit alleges that Dish engaged in a deliberate effort to “fool” Clearwire’s minority shareholders into believing that the Dish offer was legitimate.

In the suit, Sprint, which owns a majority share of Clearwire, used a variation of the word “fool” 14 times to describe the actions of Dish. They write:

“DISH’s proposal to make a tender offer to Clearwire’s stockholders was designed to induce Clearwire’s directors into selling spectrum on the cheap, or to fool Clearwire’s stockholders into voting down the Sprint-Clearwire Merger. DISH hoped that publication of this superficially higher price would induce Clearwire’s stockholders to vote against the Sprint-Clearwire Merger.”

The suit comes less than a week after Clearwire’s board changed its tune about the $3.40 per share Sprint deal, recommending that shareholders vote in favor of Dish’s $4.40 per share proposal instead.

In today’s suit, Sprint argues that Clearwire’s board — which includes former aQuantive CEO Brian McAndrews; former VoiceStream CEO John Stanton; and former U.S. Senator Slade Gorton— “panicked” and “abandoned its convictions” as the events unfolded. A spokesman for Clearwire declined to comment on “pending litigation.”

The change of course set off the legal action, which had been a consideration that Sprint CEO Dan Hesse had previously threatened. As we noted before, this is one story that probably has a few more twists and turns left in it.

The full suit is below, and here’s a very well written overview of what’s happening in the bidding war for Clearwire from The Wall Street Journal:

Sprint Complaint