Sprint Aborts MetroPCS Bid, Raises Cash

February 27th, 2012 by · 10 Comments

According to reports over the weekend, Sprint Nextel (NYSE:S, news, filings) was all set to buy MetroPCS (NYSE:PCS, news, filings) last week, but walked away at the last minute when the transaction was nixed by Sprint’s board of directors. The deal was said to be worth about $8B, giving MetroPCS shareholders a 30% premium.

I’m actually kind of surprised that the deal got that far. While Sprint needs greater scale and MetroPCS’s CDMA network is relatively compatible with their own systems, Sprint has a lot of pans on the fire right now. An expensive purchase would bring scale, but taking advantage of that scale while in the midst of so many other changes would be tricky. Nevertheless, it’s very possible that the deal will rematerialize over the next few months.  Of course it’s also possible that Sprint will simply take aim at another target looking for a more favorable price – Leap Wireless (NASDAQ:LEAP, news, filings) perhaps?.

But Sprint is also moving on other fronts, and this morning announced its intention to raise $2B by selling two notes due in 2017 and 2020 via a private placement. That money will be added to the pile Sprint plans to spend on its LTE rollout, or its iPhone subsidies, or debt refinancing, or helping fund Clearwire’s LTE overlay, etc. I’ll bet if there is interest they raise the total beyond that $2B.

I have speculated in the past that Sprint would sell its wireline business as part of its cash-raising activities, but so far it doesn’t look like they have taken active steps in that direction.

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Categories: Mergers and Acquisitions · Wireless

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10 Comments So Far

  • level3 says:

    Raising cash via a private placement is a vehicle for major shareholders to roll up their sleeves to get the job done without fooling around. They put their money where their mouth is. All action no T (at&t) talk.

    Your speculation that Sprint would sell its wireline business as part of its cash-raising activities, sounds like a deal right up Level 3″s alley.

    Private placement (or non-public offering) is a funding round of securities which are sold without an initial public offering, usually to a small number of chosen private investors.

  • CarlK says:

    Good God, level3! Are you saying that there are PRIVATE INVESTORS who care to “INVEST” in public enterprises in order to do GOOD by encouraging business enterprises to be successful while potentially enhancing job opportunities along the way?

    This is an ABOUT face HEAD turn for finally getting AHEAD of the CLASS, versus the CABAL of WALL STREET MISCREANTS working hand in glove with the Wall Street investment banks intent on doing HARM with their DEGENERATE trading platforms and schemes, any maybe SPREAD SHEETS also!

    These bastards should have been taught the DOCTORS’ Hippocratic Oath of “doing no harm.”

  • Anonymous says:

    @CarlK – is it possible to simply respond w/o all the animated, disconnected, illogical ranting? I think somewhere in your ridiculous rants you may have something to say but it gets lost with all the noise.

    @Rob/Anonymous – perhaps Sprint tried to undertake an action to achieve an addition by subtraction inorganic action by adding liquidity to fund future wireless services capabilities by divesting its wireline assets and failed to achieve enough interested parties in the wireline business and or enough of a price that would provide for sufficient enterprise valuation to achieve the intended goals of that working capital by way of a sale that they put it on hold. Thats one possible conclusion to their desire to now go the private placement route.

  • CarlK says:

    Anonymous, teach me this in a non disconnected way compared to that gobble gook you just wrote to Rob, and should we assume, yet another “Anonymous.”

    How is that Wall Street, when they are intent on raising a stock price by hook or crook, doesn’t talk about future revenues or growth rates that are now in jeopardy?

    Don’t answer because it’s a rhetorical question, off topic, but certainly designed to inflict a pertinent point.



  • Anonymous says:

    @CarlK – never mind … you obviously don’t realize you are doing it.

  • CarlK says:

    Yes, place me in the Loony Bin along with Wacky Patty of Overstock.com because there is no CONSPIRACY to constantly commit fraud against investors on WRONG STREET!

  • Anon says:

    CarlK, you obviously know a lot about telecom. I just wish that you’d explain your views on a particular topic with a bit less jazz. I often miss your point because I’m either turned off by the exclamation points and allcaps or the your free associations or wordplay lose me. I’ll be more likely to understand if you just say what you think. As they say: show, don’t tell.

  • CarlK says:

    Anon, you’re too kind. There are men and/or women who permeate this board who forgot more about telecom than I know.

    This being said, I do understand business. Moreover, I do know that “telecom” has morphed from a utility, monopoly business model into a “technology, commodity,” whose commodity portion will one day be scarce if not managed intelligently.

    I also continue to believe that the technology aspect of the new business model courtesy of the seamless, end to end global solutions Level 3 has continued building, will transition into a best of breed monopoly much like Intel in chips, always inuring to the end user in the form of price considerations on top of product efficiency, i.e. more for less.

    Take this morning’s announcement by Big (3) regarding intelligent bandwidth tied to technology in the retail space, for example?


    Back to Sprint, however. Remove Hesse from the Head of the Class, bring in McCaw, and combine Big (3), Sprint and Clwr for the MOBILE/TERRESTRIAL BANDWIDTH rides of our LIVES! 🙂

  • CarlK says:

    Anon, I have a special gift for you today. I have coined a new phrase and it applies to Wall Street Scum. I will define it for you also.

    BasherCYST-A Wall Street Analyst who relentlessly bashes a public corporation in pursuit of maintaining a tainted image of that corporation in the minds of investors whenever he or she finds opportunity.

    You can hear it in the replay of the CLWR media and tech conference call down in Palm Springs, FL, a short time ago. Much to be gleaned from Sprint’s involvement with CLWR there, as well as Wall Street’s need to know why CLWR is not a “Level 3 Disaster.”

    Check out the BASHERCYST in Question #2 while you’re at it!


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