Leap shares rise on news of MetroPCS interest
NEW YORK (Reuters) - Shares of Leap Wireless International Inc (LEAP.O) rose 2.4 percent on Friday after news that MetroPCS Communications Inc PCS.N was looking into an acquisition of the rival, low-cost wireless service provider.
Dallas-based MetroPCS has hired advisers to study a possible purchase of Leap, sources familiar with the matter told Reuters on Thursday.
Leap formed a committee to explore a sale and gauge the interest of potential buyers like AT&T Inc (T.N) and Verizon Wireless, a joint venture of Verizon Communications (VZ.N) and Vodafone (VOD.L), other sources said earlier this month.
Investors have long expected Leap and MetroPCS to join forces against industry giants AT&T and Verizon.
"The two companies share similar business models, largely contiguous and non-overlapping footprints, and both would benefit from greater national scale," Bernstein Research analyst Craig Moffett said in a note. "Subject to exchange ratios, we believe a combination would be unambiguously beneficial to both."
Leap shares rose 34 cents to $14.85, while MetroPCS shares rose by a penny to $5.95. Major U.S. indexes were down by around 1 percent.
In 2007, Leap rebuffed a MetroPCS acquisition offer worth $5.5 billion at an exchange ratio of 2.75 MetroPCS shares for each Leap share.
Any new offer from MetroPCS would probably be far lower, however, considering Leap now faces tougher competition and its current market capitalization is closer to $1 billion.
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