Sprint Nextel (NYSE:S, news, filings) is finally buying its wireless affiliate ipcs in a deal worth a total of $831M. That’s $24/share plus the assumption of $405M in net debt. A substantial 30+% premium above the current stock price, but at an EBITDA multiple of about 6 which is not that exorbitant. Sprint hopes to save $30M annually in synergies on the $550M or so in acquired (but probably overlapping) revenues.
iPCS has been a thorn in the side of Sprint for a couple years now. Well, ever since the Nextel acquisition went south as many of the company’s affiliates sued on the grounds that the Nextel business and later the WiMAX efforts compete in their markets and therefore violated the terms of the contract. Sprint bought most of them in an effort to make the problem go away, but didn’t manage to get rid of iPCS before the bottom fell completely out of the economy.
But now, as Sprint continues to gain its footing and the icy financial markets develop puddles of mush, it seems the time is finally ripe. As a result of this agreement, iPCS’s lawsuits over the IDEN and WiMAX networks will go away. If nothing else, it will simplify things. The deal will probably close in about 3 months. Sprint’s cleanup effort has been epic, but they seem to be making progress. Hmmm, I wonder what their Q3 numbers will look like.
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