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Telecom & Wireless

Sprint Finally Acquires iPCS (S, IPCS)

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By Douglas A. McIntyre Updated Published
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Sprint Nextel Corp. (NYSE: S) has finally figured a way to cure its affiliate lawsuits.  The wireless operator is acquiring iPCS, Inc. (NASDAQ: IPCS) in a merger valued at approximately $831 million, including the assumption of $405 million of net debt.  Sprint Nextel will commence a cash tender offer to acquire all iPCS common shares outstanding at $24.00 per share, what looks to be a 34% premium.  Our take on this one is that it is about time.

Sprint will add more than 700,000 PCS wireless users and 270,000 wholesale customers to become Sprint direct subscribers.  It also extends its direct service territory to an additional 12.6 million people.  As part of the deal, Sprint noted that it will divest the iDEN network assets in certain Midwestern states pending this transaction’s close.

This transaction value represents 6.4-times projected 2010 Adjusted Earnings Before Income, Taxes, and Depreciation. Sprint noted that it expects to achieve approximately $30 million of synergies annually in the transaction and expects the transaction to be free cash flow accretive to Sprint in 2010.

iPCS has been suing Sprint for so long after Sprint spent part of the decade rolling up effectively all of its large affiliates.  This will be the end of a very long saga.  In addition to buying the assets, Sprint is effectively also buying out any future lawsuit liabilities from this affiliate.

JON C. OGG
OCTOBER 19, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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