Sprint Nextel said Oct. 19 it is acquiring affiliate iPCS for approximately $831 million, including the assumption of $405 million of iPCS debt. The deal will also end the long standing litigation between Sprint and iPCS, which has sued to block Sprint from entering iPCS territory.
Sprint Nextel and iPCS said they will seek an immediate stay of all pending litigation between the parties with a final resolution to become effective upon closing of the acquisition. iPCS operates under the Sprint brand in 81 markets including Illinois, Michigan, Pennsylvania, Indiana, Iowa and Tennessee.
Under the terms of the agreement, Sprint Nextel will offer a cash tender offer to acquire all of iPCS' outstanding common shares for $24 per share. This price per share represents a 34 percent premium over iPCS' closing stock price as of Oct. 16. The agreement also requires a minimum of a majority of the shares outstanding to be tendered in the offer.
Following completion of the tender offer, any remaining shares of iPCS will be acquired in a cash merger at the same price per share. Shareholders with approximately 9.5 percent of the outstanding common shares of iPCS have already agreed to tender their shares pursuant to the tender offer and to vote their shares in favor of the merger.
"Acquiring iPCS brings added value to Sprint by expanding our direct customer base, growing our direct coverage area and simplifying our business operations," Dan Hesse, CEO of Sprint Nextel, said in a statement. "Customers in iPCS territory will see a seamless transition and continue to enjoy a superb customer experience."
Timothy M. Yager, president and CEO of iPCS, added, "Given the increasingly competitive landscape, we believe this is an opportune time to provide our shareholders with a liquidity event at a very attractive price. iPCS shareholders will receive a significant and immediate premium for their shares and our customers will continue to receive the same excellent service from the same dedicated people who provide that service today."