Sprint Locks Up Largest Affiliate With Nextel Partners Buy
NEW YORK -(Dow Jones)- Sprint Nextel has finally agreed to buyout terms with affiliate Nextel Partners, ending a bitter dispute and locking up the largest remaining affiliate for the wireless company.
Under the terms of the agreement, Sprint will pay $28.50 a share in cash. A deal between the two was a foregone conclusion - Nextel Partners shareholders exercised a put option in October that forced Sprint to buy the remaining 68.6% of the company it doesn't already own. But prior to the deal it was uncertain how long the process would have lasted.
The negotiations could have dragged on as both sides had named appraisers to determine the valuation of Nextel Partners in a process that could have lasted several months. Sprint's appraiser, Lazard Ltd., determined Nextel Partners was worth $27.25 a share, while Nextel Partners' appraiser, Morgan Stanley, said the shares were worth $29.75. Since the difference was within 10% of each other, the two sides came up with an average of $28.50. If the difference had been greater than 10%, a third appraiser would have been called.
Nextel Partners, based in Kirkland, Wash., has 1.9 million subscribers and boasts impressive growth relative to its peers. In the third quarter, it added 107,200 net new subscribers and saw its revenue rise 32% to $445.2 million.
The agreement puts to bed a bitter dispute that included legal battles over such issues as the disclosure of information pertaining to valuation of Nextel Partners.
It also clears Sprint, Reston, Va., to deal with the rest of the affiliates on the Sprint side. Sprint started out with 10 affiliates, has since acquired five. The remaining are three publicly traded companies - Ubiquitel Inc., IPCS Inc. and Shenandoah Telecommunications Co. - and two private firms, Northern PCS and Swiftel Communications. Ubiquitel shares were up 1.1% to $9.95 on the news.
Following the acquisition of the largest Sprint affiliate in Alamosa Holdings Inc., which is expected to close in the first quarter, some analysts said they believed Sprint would buy the rest of the affiliates rather than rework the various agreements. In doing so, it would settle the disputes over what the affiliates felt was a violation of their regional exclusivity agreements.
Nextel Partners recently traded at $26.36, up 4 cents, or 0.2%, on volume of 478,000. Average daily volume is 1.7 million.
Sprint recently traded at $24.38, down 26 cents, or 1.1%, on volume of 17.8 million. Average daily volume is 12 million.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com
(END) Dow Jones Newswires "
Posted to the site on 20th December 2005