The Federal Trade Commission and the Department of Justice
gave the green light Aug. 24 to Sprint Nextel's proposed $483 million acquisition
of Virgin Mobile USA.
The agencies' reviews of the deal, announced July 28, covered the antitrust
aspects of the transaction.
The merger still needs Federal Communications Commission approval since Virgin
Mobile holds international spectrum licenses that need to be transferred to
Sprint.
Under the terms of the agreement, Virgin Mobile USA stockholders will receive
shares of Sprint common stock based on a 10-day average closing price
equivalent to $5.50 per Virgin Mobile USA share.
At closing, Sprint will retire all of Virgin Mobile USA's outstanding debt,
which is currently $248 million net of cash and cash equivalents as of March
31, but is expected to be no more than $205 million net of cash and cash
equivalents on Sept. 30.
With more than 90 percent of Americans already armed with cell phones, major
carriers are increasingly looking to prepaid carriers as a source of new
subscribers. Virgin Mobile, Boost (owned by Sprint), Leap Wireless, TracFone
and MetroPCS are all competing in the crowded market. In June, TracFone began
selling unlimited calling and text messaging for $45 per month using Verizon
Wireless' network.
Bringing together Boost and Virgin Mobile under one brand, Sprint said, allows
the carrier to offer two different prepaid services, each with a distinctive
style and appeal to different customer demographics.
Following the closing of the deal, Sprint's prepaid business will be led by
current Virgin Mobile USA
CEO Dan Schulman, who will be responsible
for the business strategy and growth of the prepaid segment, while Matt Carter
will continue to lead Boost Mobile and will report to Schulman.
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