Sprint Nextel agreed to acquire AirGate PCS, Sprint’s largest wireless affiliate, for $4.3bn, ending a legal battle that began when Sprint acquired Nextel Communications for $36bn in August.
AirGate is owned by Alamosa Holdings and has 1.48m wireless customers in 19 states. The offer, equivalent to $18.75 a share, is 16 percent more than Alamosa’s closing price on Friday on the Nasdaq.
Since the merger, Sprint Nextel has purchased a string of affiliates adding a total of 2.3m customers in the process. It has agreed to buy US Unwired, IWO Holdings and Gulf Coast Wireless and signed agreements with iPCS. and UbiquiTel, promising not to compete until the companies renegotiate affiliation terms.
However not all the negotiations have gone smoothly. Alamosa had sued Sprint Nextel claiming that the merger violated terms of an agreement that let AirGate sell Sprint-branded call plans free of competition.
A hearing on the suit was canceled in September in a move that was interpreted by analysts as indicating that a settlement was near.
Meanwhile Sprint Nextel is embroiled in a seperate dispute with Nextel Partners, the Nextel affiliate that sells Nextel service in second tier cities across the US. Under the terms of a seven-year old agreement between Nextel and Nextel Partners, Nextel Partners’ share holders have exercised a ‘put’ option forcing Sprint Nextel to purchase the Nextel Partners shares it does not already own.
But Sprint Nextel and Nextel Partners have disagreed over the valuation procedures and went to court to settle the issue. Late last week Nextel Partners won a key victory when a judge ruled that its value as determined by two appraisers must be publicly disclosed.
Each appraiser will determine a value for Nextel Partners and if the values are more than 10 percent apart, a third appraiser will be appointed. Kirkland, Washington-based Nextel Partners hired Morgan Stanley as its appraiser while Reston, Virginia-based Sprint Nextel hired Lazard.
The two approasers until Februart 11 to make their recommendations.
Sprint Nextel’ share were up slightly at $25.75 in early trading in New York Stock Exchange composite trading on Monday while Alamosa’s shares gained $2.10 to $18.36 on the Nasdaq Stock Market.