Sprint Nextel to acquire two Sprint affiliates
Friday, September 2nd 2005, 10:22 am
By: News On 6
KANSAS CITY, Mo. (AP) _ Sprint Nextel Corp. said Tuesday it will purchase two of its affiliates, bringing 332,000 subscribers into the fold and resolving one of the company's objections to Sprint's recent acquisition of Nextel Communications Inc.
Sprint Nextel will pay $287.5 million, including the assumption of an undisclosed amount of debt, for Baton Rouge, La.-based Gulf Coast Wireless, and pay $219 million plus assume $208 million of debt for Albany, N.Y.-based IWO Holdings Inc. Both are affiliates of Sprint, which merged with Nextel on Aug. 12 to form Sprint Nextel, which has its corporate headquarters in Reston, Va., and operations headquarters in Overland Park, Kan.
As part of the agreement, expected to be completed in the fourth quarter, Gulf Coast Wireless would seek an immediate stay to litigation it has filed in the U.S. District Court in the Middle District of Louisiana challenging the merger.
IWO's shares, which trade on the highly speculative over-the-counter market, were up $5.75, or 16 percent, to $41.50 in afternoon trading Tuesday. Sprint Nextel shares fell 33 cents to close at $25.25 Tuesday on the New York Stock Exchange.
A number of Sprint's 11 affiliates have filed suit, claiming the acquisition of Nextel would allow Sprint to violate agreements not to compete with the affiliates in their territories.
Earlier this month, federal regulators approved Sprint's purchase of Lake Charles, La.-based affiliate U.S. Unwired Inc. for $1.3 billion, ending that company's legal challenges.
Sprint Nextel has brokered deals with several other Sprint affiliates, promising to stay out of their territories while both sides negotiate a long-term deal.
Sprint Nextel is also in a fight with Nextel's affiliate, Nextel Partners Inc., which is asking its shareholders to approve a ``put'' option that would require Sprint Nextel to buy the two-thirds of the affiliate it doesn't own.
Earlier this month, Sprint Nextel said it would seek an appraisal of the remaining two-thirds. Nextel Partners, based in Kirkland, Wash., sells Nextel-branded products and services in 31 states.
Gulf Coast Wireless, with 130 employees and 2004 revenue of $87.9 million, provides Sprint PCS services to 95,000 subscribers in southern Louisiana and Mississippi.
Sprint Nextel said it will pay $42.50 per share in cash for IWO Holdings, which provides Sprint services in upstate New York, New Hampshire, Vermont and parts of Massachusetts and Pennsylvania. IWO, with 230 employees and 2004 revenue of $187 million, has serving more than 237,000 subscribers.
Sprint said 33 percent of IWO's shareholders have agreed to vote in favor of the deal, expected to close in the fourth quarter.
Both deals require regulatory approval.