Both firms hailed the deal, with Sprint stating it expects to obtain $30 million in "synergies annually," and iPCS calling the agreement "a very attractive price." Sprint said the acquisition should be free cash flow accretive in 2010.
The companies had been locked in contentious litigation in recent months over a 1999 pact on rights to offer service in iPCS territory, including Illinois, Indiana, Iowa, Michigan, Ohio, Pennsylvania, and Tennessee. iPCS had also challenged Sprint on rights to offer services from Clearwire and Virgin Mobile, both over which Sprint has controlling interest.
"Acquiring iPCS brings added value to Sprint by expanding our direct customer base, growing our direct coverage area, and simplifying our business operations," said Dan Hesse, Sprint Nextel CEO, in a statement. "Customers in iPCS territory will see a seamless transition and continue to enjoy a superb customer experience."
The acquisition calls for Sprint to acquire iPCS outstanding shares for $426 million at $24 a share, representing a 34% premium over the Oct.16 closing price of iPCS. The deal also entails Sprint assuming $401 million of iPCS' net debt. Following a court ruling months ago, Sprint had been planning to divest some former Nextel iDEN network assets. With the Monday agreement, Sprint said it will no longer be required to divest the iDEN network in IPCS territories.
Noting that the acquisition is subject to customary closing conditions, the firms said they expect the deal to be completed in the fourth quarter of 2009 or early 2010.
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