July 12 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 spectrum.
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
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
As 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.
The 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."
Two 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.
AT&T 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.
The 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
At 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 filing.
The deal is expected to close in nine months and is subject
to regulatory review.
Leap said Lazard served as its sole financial adviser.