Under the agreement, Reston, Virginia-based Sprint Nextel will buy all of UbiquiTel’s outstanding common stock for $10.35 per share in cash. This translates to a purchase price of approximately $1.3bn, including the assumption of about $300m of net debt. The acquisition must be approved by UbiquiTel’s shareholders and regulators, but the companies expect to complete it by June.
For 2005 Ubiquitel posted net income of $56.3m, up from net loss of $15.3m in 2004. Sales were also up at $422.7m, compared to $366m in 2004.
Sprint Nextel will gain approximately 452,000 PCS wireless users who will become direct subscribers. The purchase also extends the operator’s direct service territory to an additional 8.3 million people in Kentucky, Indiana, Tennessee, Wyoming, Utah, Nevada, Idaho, Washington, and California.
Sprint Nextel Corp remained the third largest mobile provider in the US after the $36bn acquisition of Nextel Communications Inc by Sprint Corp last year. It has been purchasing affiliates over the past 10 months as a consequence of the merger. Sprint used a number of affiliates across the US to sell a mobile phone service under the Sprint brand, and the acquisition of Nextel threw up a number of legal challenges because Nextel offered a rival mobile service in parts of the country where Sprint had granted exclusive rights to some its own affiliates.
UbiquiTel had sued Sprint after its decision to acquire Nextel. In a lawsuit filed in the Delaware Court of Chancery, UbiquiTel said the deal violated its right to be the exclusive provider of Sprint brand services in its markets. It is thought that closing arguments were held recently and UbiquiTel was awaiting a verdict when the merger was announced.
With the agreement, Sprint Nextel and UbiquiTel will seek an immediate stay to their litigation. A resolution will become effective when the acquisition closes.
Sprint Nextel had set aside approximately $12bn for the affiliate acquisitions. Last December it purchased Enterprise Communications for $98m, as well as its largest affiliate namely Nextel Partners Inc for $6.5bn in cash. In November it acquired Alamosa Holdings Inc for approximately $4.3bn in cash, including the assumption of approximately $900m of net debt. In September it agreed to pay $219m and assume $208m of debt (or $427m in total) to acquire IWO Holdings Inc. It also agreed to pay $212.5m and assume $75m worth of debt ($287.5m in total) to acquire privately held Gulf Coast Wireless LP. Gulf Coast Wireless had also sued over the Sprint-Nextel deal.
In July 2005 it paid $1.3bn for US Unwired because the affiliate had sued to block the Sprint-Nextel deal.
