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11/25/2009
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Sprint Gets Nod To Buy iPCS

Federal and state approval of the $831 million deal removes all but one hurdle toward finalizing the acquisition.

Sprint Nextel said Wednesday it has received the regulatory approvals needed to complete the acquisition of iPCS, and this clears most of the hurdles for the deal that's valued at $831 million.

The Federal Communications Commission approved the transfer of the spectrum license, and the Public Service Commission of West Virginia also approved the deal, Sprint said. The deal does not need any further state approvals, the carrier said.

A completed acquisition would remove multiple hurdles for Sprint to roll out its 3G and 4G networks because the companies had been locked in contentious litigation over the operations of iDEN networks in the Midwest markets. In particular, the companies had been locked into a legal battle over the right to offer services in Illinois, Indiana, Iowa, Michigan, Ohio, Pennsylvania, and Tennessee.

In February, a court ordered Sprint to cease operating its iDEN network in the disputed markets in early 2010, but the acquisition will settle all pending legal issues. Additionally, Sprint said the deal will also lead to $30 million in annual synergies.

Sprint is still facing one more hurdle to complete the deal, as a key investor in iPCS said the deal severely undervalues the regional network operator. The acquisition bid calls for Sprint to acquire iPCS shares for $24 a share, but Greywolf Capital Management said an offer of $34 to $47 a share would be more in line with what iPCS is worth.

The opposition is not expected to derail the deal, as Greywolf only owns 8.2% of iPCS. Other major investors support the deal, and iPCS' board of directors has unanimously recommended shareholders agree to the deal. Sprint is trying to get the deal completed by the end of the year, but it may take until the first quarter of 2010.

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