AT&T Inc said on Friday it will acquire prepaid wireless provider
Leap Wireless International Inc in a deal valued at about $4 billion,
including debt as large carriers scramble to accumulate valuable
Under the agreement, AT&T will acquire all of Leap's
stock and approximately 5 million subscribers for $15 per share in cash
or about $1.2 billion. The offer represents a premium of 88 percent to
Leap's Friday closing price of $7.98. As of April 15, Leap had $2.8
billion in debt, the companies said in a statement.
Leap's shares more than doubled to $16.80 in after hour trade after closing at $7.98 on Friday.
The deal is the latest in a series of acquisitions in the wireless industry and follows Softbank's acquisition of Sprint.
the No. 2 wireless provider in the United States, AT&T has been
looking to grow in a mature market and has been urgently seeking access
to additional wireless spectrum. It has held talks to buy smaller rival
Leap Wireless International last year, Reuters reported.
proliferation of bandwidth-hungry smartphones and tablets has U.S.
wireless carriers clambering to gain access to more airwaves. Clearwire
was recently part of a tug a war over its valuable spectrum between
Sprint and Dish Network Corp.
"Its mostly about the spectrum for AT&T," said Todd Rethemeier, an analyst with Hudson Square Research.
"It's Leap's only alternative. Continuing as an independent company is not a viable option for Leap at this point."
years ago, AT&T struck a deal to buy T-Mobile USA for $39 billion,
but U.S. regulators blocked the attempt by the No. 2 and No. 4 U.S.
wireless carriers to merge.
Based in San Diego, Leap's network covers about 96 million people and operates under the Cricket brand.
said it will retain the Cricket brand name and expand its presence in
the U.S. After the deal closes, AT&T said it plans to use Leap's
spectrum in furthering its development of AT&T's 4G LTE network.
combined company will have the financial resources, scale and spectrum
to better compete with other major national providers for customers
interested in low-cost prepaid service, the companies said.
Almost a third of Leap's shareholders have voted in favor of the transaction.
the end the of the first quarter, $19 billion hedge fund Paulson &
Co owned 7.8 million shares of Leap Wireless, according to a regulatory
The deal is expected to close in nine months and is subject to regulatory review.
Leap said Lazard served as its sole financial adviser.
© Thomson Reuters 2013