Sprint Buys Nextel Partners for $6.4B
Ending a nearly four month dispute between the two companies, Sprint Nextel agreed to purchase affiliate Nextel Partners in a deal worth $6.4 billion. The two sides had wrangled over a purchase price after the merger between Sprint and Nextel was finalized in August.
Under the terms of its agreement with, Nextel Partners reserved the right to demand the wireless carrier purchase the remaining 68 percent of the company it did not already own in the event Nextel was acquired or merged with another wireless carrier.
In October, shareholders of Nextel Partners approved a plan that allowed the company to pursue enforcement of that clause. However, the two sides bickered over a price while the company battled lawsuits from its various affiliates over non-compete clauses in their contracts.
Sprint's way of appeasing suing affiliates has been to acquire them, and shareholders of the rural carrier felt they were owed the same treatment.
The valuation of the company is the result of the averages of appraisers for both sides. Nextel Partner's appraisers valued the company at $9.6 billion, or $29.75 per share, while Sprint Nextel's found the value to be $8.8 billion, or $27.25 per share.
"Sprint Nextel shares with Nextel Partners a commitment of excellence to our customers, employees and shareholders. As we work through the regulatory approval processes, we intend to focus on plans for efficiently integrating Partners' business into our operations in a way that is seamless for customers and employees," commented Sprint Nextel CEO Gary Forsee.
Nextel Partners has 1.8 million customers in 31 states, and would be the sixth affiliate to be acquired by Sprint Nextel since the announcement of the merger. Completion would be subject to approval by the FCC and Department of Justice.
Jay Pultz of Gartner Research said the agreement clears out the "major decisions" regarding Sprint Nextel's affiliates. "So onto the real fight -- battling Verizon Wireless and AT&T/BellSouth's Cingular for leadership in the U.S. wireless and mobility service market."