Sprint Takes First Big Step in iPCS Buyout Process
Sprint Nextel Corp. (S) has taken the first big step in its $831 million takeover of affiliate iPCS Inc. (IPCS).
On Wednesday, Sprint launched its tender offer for iPCS, asking shareholders to sell their stock for $24 per share. That’s 12 cents more than the trading price at 12:01 p.m. Eastern on Wednesday.
The tender offer is set to expire at midnight on Nov. 25, while Sprint expects to close the entire iPCS acquisition either late in the fourth quarter of 2009 or in early 2010.
Sprint decided earlier this month to buy iPCS to quiet the legal action surrounding the two companies’ business agreements. Affiliate iPCS filed yet another lawsuit against Sprint over the pending Sprint-Virgin Mobile merger, claiming it would face unfair competition from Sprint, which supplies its devices and network coverage. iPCS also sued Sprint last year over dealings with Clearwire Corp.
Buying iPCS means Sprint won’t have to divest assets in iPCS territory, something it had planned to do even before announcing the Virgin Mobile buyout. But when that deal materialized, iPCS grew outraged over the competition implications in its regions.
Once the iPCS deal wraps, Sprint will be free to continue the Virgin Mobile acquisition, which will give it a much larger share of the growing prepaid market. That’s especially important for Sprint as it bleeds valuable postpaid subscribers.
In the meantime, the iPCS board has unanimously recommended that its stockholders accept Sprint’s tender offer and approve the pending merger.
