On Thursday, Sprint offered $2.1 billion to buy the remaining shares it doesn't currently own in rival cellular network Clearwire.
The Sprint-Clearwire deal would see the 11 million subscriber-strong cellular network snapped up by the U.S.' third largest network for $2.90 a share for the remaining 48.3 percent of Clearwire shares that Sprint does not yet own, along with a $800 million cash injection to help keep Clearwire afloat.
The share buy-out deal was already 5 percent higher than Clearwire's closing share price on Wednesday.
But on news of the deal, Clearwire shares rocketed by almost 15 percent to $3.16 on the news, sending a strong signal that investors wanted more out of the deal. Reuters now reports that Clearwire investors are thinking exactly along those lines and want more out of the deal.
But there's a problem.
Sprint announced in October that it would sell a 70 percent stake in the company to Japan's Softbank for $20.1 billion. In return, Sprint will receive $8 billion of new capital for investment back into its mobile network. As we now know, this was partially to buy out Clearwire in order to gain more customers and to expand its network, along with other investments.
Here's where the domino effect comes into play. Softbank owns a majority chunk of Sprint, and Sprint wants the remaining shares of Clearwire, but Softbank ultimately -- as it is the majority shareholder in Sprint -- has to approve any Clearwire takeover.
So long as nobody wanted more, the deal probably could have gone ahead without any of the companies involved suffering any major headaches.
However, Clearwire shareholders -- who own about 7.6 percent of the company -- criticized the Sprint offer and wanted at least $5 a share, pushing Clearwire's valuation at roughly $7.3 billion, or three-times more than the initial asking price.
Softbank, however, has capped the bid that Sprint can offer to $2.97 per share, or $4.34 billion, according to two sources speaking to the Reuters news agency. Softbank's cap leaves the Clearwire bid short of about $3 billion.
It's a game of buy-out chicken. Now it's just a case of who will buckle under the pressure of the potential sale: Softbank may raise its bid but can't look like a pushover, while Clearwire can't survive in the long-term but can't push its asking price too high or it may lose out on non-banking financing.
But Clearwire, at this point, cannot be too picky on the details and may have to ultimately succumb to a price lower than what the company's share price reflects. Clearwire is struggling and requires financing to upgrade its infrastructure to keep its 11 million subscribers connected, and ultimately keep the company afloat. Reuters says the company has enough money to "last until the third quarter" of 2013.
Crest Financial, which owns more than 3 percent of Clearwire, said it "intends to take whatever actions it can" to avoid "unfair dealing by Sprint and other parties," while the financial firm's lawsuit continues on in a bid to prevent a deal between Sprint and Clearwire.
We've put in questions to both Sprint and Clearwire, but did not hear back outside U.S. business hours. If we hear back, we'll update the piece.