The US Federal Trade Commission has issued a clearance for the proposed $483m merger between Sprint Nextel and Virgin Mobile USA, reported Reuters quoting US FTC as its source.
In July, Sprint Nextel said that it plans to acquire Virgin Mobile USA in a deal that would strengthen its position in the prepaid wireless segment.
Sprint already owns 13% of Virgin Mobile USA, which uses its network to offer service. The acquisition is expected to strengthen Sprint’s position in the growing prepaid segment by bringing together Virgin Mobile’s Iconic brand with Sprint’s Boost Mobile business.
Under the agreed deal, the exchange ratio for the Virgin Group, which owns 28.3% of Virgin Mobile USA, will be equal to 93.09% of the exchange ratio for the public stockholders, or $5.12 per Virgin Mobile USA share for common stock owned by the Virgin Group.
The share exchange ratio for SK Telecom, which owns 15.3% of Virgin Mobile USA, will be equal to 89.84% of the exchange ratio for the public stockholders, equating to $4.94 per Virgin Mobile USA share for common stock owned by SK Telecom.
Sprint also plans to retire all of Virgin Mobile USA’s outstanding debt, which is expected to be no more than $205m net of cash and cash equivalents, by September 30, 2009.
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