[Infowarrior] - Sprint-Nextel to acquire Virgin Mobile USA

[Richard Forno]

Sprint-Nextel to acquire Virgin Mobile USA
By Paul Taylor in New York

Published: July 28 2009 15:35 | Last updated: July 28 2009 15:35

http://www.ft.com/cms/s/0/12c64f08-7b83-11de-9772-00144feabdc0.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058&nclick_check=1

Sprint Nextel, the third largest US mobile network operator, agreed to  
acquire Virgin Mobile USA, a leading prepaid phone company, in an all  
stock deal valued at $5.50 per share or $483m including Sprint’s  
existing 13.1 per cent stake in Virgin Mobile USA.

The deal, which is expected to close in the fourth quarter or early  
next year, will enable Sprint to significantly expand it presence in  
the US prepaid phone market and combine Virgin Mobile USA, set up by  
Richard Branson’s Virgin group, with its existing Boost Mobile prepaid  
unit.

Boost Mobile has emerged as a key growth driver for Sprint which has  
been struggling to stem post paid subscriber losses following its  
$36bn acquisition of Nextel in 2005.

The prepaid market in the US has benefited recently as consumers,  
concerned about job losses and facing an uncertain economic outlook,  
have turned to prepaid plans as a way to control mobile phone spending.

Sprint already provides the network capacity for Virgin Mobile USA  
which has mainly targeted young subscribers making integration  
relatively straight forward.

After the deal closes, Sprint’s prepaid business will be run by Dan  
Schulman, Virgin Mobile USA’s chief executive.

The transaction represents a 31 percent premium to Virgin Mobile’s  
Monday closing share price of $4.21.

When the deal closes, Sprint will retire Virgin Mobile USA’s  
outstanding debt, which is expected to be no more than $205m at the  
end of September.

Sprint plans to issue between 81.4 million and 104.7 million shares in  
exchange for all Virgin Mobile USA common and preferred stock that it  
does not already own.

The stock has ranged from 60 cents to $5.31 over the past year.

Copyright The Financial Times Limited 2009