 |  | Sprint Nextel Corp said Tuesday it agreed to acquire Virgin Mobile USA Inc. in a stock deal valued at US$5.50 per share in a bid to expand its prepaid cell phone offerings. --PHOTO: AP |
OVERLAND PARK (Kansas) - TELECOMMUNICATIONS company Sprint Nextel Corp said Tuesday it agreed to acquire Virgin Mobile USA Inc. in a stock deal valued at US$5.50 per share in a bid to expand its prepaid cell phone offerings.
Sprint valued the deal at US$483 million (S$695 million), including Sprint's existing 13.1 percent stake in Virgin Mobile. The transaction represents a 31 per cent premium to Virgin Mobile's Monday closing share price of US$4.21.
When the deal closes, Sprint will retire Virgin Mobile USA's outstanding debt, which is expected to be no more than US$205 million on Sept. 30.
The deal allows Sprint to expand its prepaid cell phone offerings, bringing together the Virgin Mobile brand with its current Boost Mobile business.
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 deal is expected to be complete in the fourth quarter of 2009 or in early 2010. After the deal closes, Sprint's prepaid business will be run by Dan Schulman, current Virgin Mobile USA CEO.
Shares of Virgin Mobile soared US$1.09, or 25.9 per cent, to US$5.30 in premarket activity. The stock has ranged from 60 cents to US$5.31 over the past year. -- AP
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