Nextel Partners: Nextel Communications Valuation View Of Co Wrong

WASHINGTON -(Dow Jones)- Nextel Partners Inc. (NXTP) believes Nextel Communication Inc.'s (NXTL) view of the process to determine the company's value for a potential sale back to its parent is "simply wrong," according to a document filed Friday with the Securities and Exchange Commission.

The proposed $35 billion merger of Sprint Corp. (FON) and Nextel opens the door for Nextel Partners shareholders to sell the company back to its parent at a premium.

In a proxy filed June 23, a special committee consisting of directors of Nextel Partners unanimously recommended that shareholders vote to exercise their "put right," which would force the combined Sprint/Nextel to buy out Nextel Partners.

The right or option is seen as a defensive mechanism for Nextel Partners to protect itself from being stranded if Nextel were acquired. Nextel Partners, which provides wireless service using Nextel's technology, is tightly tied to Nextel.

Previously, Nextel - owner of 32% of Nextel Partners' stock - said it believes that the relevance of control premiums used in Nextel Partners proxy to set a value for a potential sale is limited.

Nextel hired Morgan Stanley to evaluate and determine a value of Nextel Partners for the purpose of setting the premium. The financial adviser reviewed and analyzed nine precedent change-of-control transactions, including cash deals, cash and stock deals, and stock-only transactions, with values of more than $1 billion. In the cash transactions, which Morgan Stanley identified as the most relevant, the average of all premiums was 40%.

Nextel Partners said that Nextel would have to successfully demonstrate to a panel of valuation experts that the appraisal price was "grossly incorrect or fraudulently obtained" if it wants to challenge the fair market value of the company.

Nextel Partners also noted that any "challenge ceiling price" with either Nextel or Nextel Partners' Class A shareholders as the challengers wouldn't be relevant as neither group qualifies as valuation experts.

The issue over the potential price of Nextel Partners for a sale back to Nextel is another chapter in a growing and increasingly contentious saga between the parties.

The parties are also in dispute over Nextel's post-branding strategy following the completion of its merger with Sprint.

-By Chad Clinton, Dow Jones Newswires; 202-862-1349; chad.clinton@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 15th July 2005