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Leap turns down $5bn bid by rival

18 сентября 2007

Leap Wireless International on Sunday rejected a $5bn unsolicited takeover bid from rival US telecommunications group MetroPCS, setting the stage for a lengthy battle over the possible deal.

After nearly two weeks of silence, Leap’s board said the all-stock offer by MetroPCS, worth $69.03 per share at Friday’s close, undervalues the company, fails to recognise Leap’s growth prospects and comes at a time of too much uncertainty over MetroPCS’s management team.
Dallas-based MetroPCS and San Diego-based Leap are two of the fastest growing US mobile carriers. Together they would serve 6.2m subscribers, ranking the combined group fifth in the US market behind AT&T, Verizon Wireless, Sprint Nextel and T-Mobile USA.
MetroPCS offered 2.75 of its shares for each outstanding common share of Leap, which represented a 3.5 per cent premium to Leap’s value when the offer was announced but is at a discount to its current share price of $74.32.
Following the rejection by Leap’s board, an agreement between the two companies seemed less likely.
In an interview with the Financial Times, Douglas Hutcheson, chief executive of Leap, said the price of the MetroPCS offer was not the only reason it was turned down.
“It is inadequate regarding valuation, it does not take into account Leap’s growth prospects, it misallocates synergies and lacks a management and integration plan,” said Mr Hutcheson.
He added: “I think the timing is opportunistic . . . We are concerned about the unsolicited nature of this and are equally concerned about the process and the ability [of MetroPCS] to meet its own shareholders’ expectations.”
MetroPCS said last night: “We are disappointed, unimpressed, and studying our options.”
At the time the bid was announced, Roger Linquist, MetroPCS chief executive, said: “We believe now is the right time to combine our two businesses. We see a compelling strategic rationale to bring together the two companies.”
MetroPCS claims it can generate as much as $2.5bn in savings by combining with Leap. A deal might also give the two companies more clout in an upcoming wireless spectrum auction.
MetroPCS has been looking for a new chief executive to replace Mr Linquist in the event he should retire, leading to questions about the future make-up of the company’s management team.
Leap also raised concerns about MetroPCS’s ability to successfully expand new markets, citing delays in its plans for a roll-out in Los Angeles.

Источник: Financial Times

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