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Quinn Emanuel Founder to Lead Clearwire M&A Fight

Clearwire Corp. shareholder Crest Financial Ltd. hasn't been shy about pulling out the big guns to fight a takeover by Sprint Nextel Corp., and it isn't stopping with its choice of counsel, on Monday tapping legendary litigator John Quinn to lead its trial team.

Quinn, a founding partner of Quinn Emanuel Urquhart & Sullivan LLP, is tasked with proving that Clearwire's board breached their duties to minority stockholders by allowing Sprint to acquire the 49 percent of Clearwire it doesn't already own for about $2.2 billion.

The lawyer has already taken a front-and-center spot in Crest's public relations push.

“As the controlling stockholders of Clearwire, Sprint owes fiduciary duties — duties of loyalty and trust — which require it to protect the interests of the company's minority stockholders,” Quinn said in a statement. But “Sprint is thumbing its nose at the other stockholders and seeking to force a sale of Clearwire at a grossly inadequate price.”

Quinn added that he expected a “very substantial” award for Clearwire's public shareholders, either through an appraisal of their shares or damages at trial. That would be a rarity in deal litigation, where most suits settle for disclosures and attorneys' fees only.

Quinn isn't known for M&A litigation, but has a resume full of high-profile business battles, most recently a buzz-worthy representation of Samsung Corp. in its smartphone patent fight against Apple Inc. He will go up against a slew of fiduciary law heavyweights, led by Skadden Arps Slate Meagher & Flom LLP for Sprint and Simpson Thacher & Bartlett LLP for Clearwire's special committee.

The trial is set to begin next month in the Delaware Chancery Court, with Chancellor Leo E. Strine Jr. presiding.

Crest, which owns 8.3 percent of the shares not held by Sprint, has been the most vocal among a chorus of Clearwire stockholders unhappy with the deal. The Texas-based hedge fund claims that the $2.97 per share price undervalues Clearwire's airwaves — possibly by a factor of five, based on a study Crest commissioned.

Meanwhile, Crest has mailed its own proxy statements to shareholders urging a “no” vote on the transaction. Noting competing offers from Dish Network Corp. and Verizon Wireless for Clearwire's spectrum, it said that “the battle for Clearwire has just begun.”

“The immense value of the wireless spectrum owned by Clearwire should benefit all Clearwire stockholders and should not be handed over on the cheap to Sprint, its controller,” Crest General Counsel David Schumacher said.

As the May 21 shareholder vote draws closer, Crest has taken its fight to nearly every conceivable venue, asking the Federal Communications Commission to block the deal, urging shareholders to reject it and pushing unsuccessfully for an injunction in Delaware court.

It appears to have substantial support among Clearwire's bigger minority holders. Last week, four hedge funds with about 18 percent of the non-Sprint shares came out against the deal. And Aurelius Capital Management LP, which owns another 2.4 percent, has sued separately in Delaware.

For its part, Clearwire's board continues to push the Sprint deal. The company sent a detailed letter to stockholders, saying the Sprint financing is the best and surest cure for the company's “substantial funding gap.”

Crest is represented by John Quinn of Quinn Emanuel Urquhart & Sullivan LLP, Collins Seitz Jr., David Ross and Garrett Moritz of Seitz Ross Aronstam & Moritz LLP, Viet Dinh of Bancroft PLLC, and Michael Holmes, Steve Gill, Kai Haakon Liekefett, Shaun Mathew and Benjamin Barron of Vinson & Elkins LLP.

Sprint is represented by Robert Saunders and Ronald Brown of Skadden Arps Slate Meagher & Flom LLP.

Clearwire is represented by Martin Lessner of Young Conaway Stargatt & Taylor LLP and Matthew Solum of Kirkland & Ellis LLP. The company's independent committee is represented by Rudolf Koch of Richards Layton & Finger PA and Joe McLaughlin of Simpson Thacher & Bartlett LLP.

Clearwire founder Craig McCaw is represented by Kenneth Nachbar of Morris Nichols Arsht & Tunnell LLP and by Friedman Kaplan Seiler & Adelman LLP.

The case is Crest Financial Ltd. v. Sprint Nextel Corp. et al., case number 8099, in the Delaware Court of Chancery.