MetroPCS bids $5.3 billion for Leap Wireless

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NEW YORK, Sept 4 (Reuters) - Wireless service provider MetroPCS Communications Inc (PCS.N: Quote, Profile, Research, Stock Buzz) on Tuesday proposed buying competitor Leap Wireless International Inc (LEAP.O: Quote, Profile, Research, Stock Buzz) for more than $5 billion in stock in a letter to the company's board of directors.

MetroPCS, which said a deal would create the fifth-largest national wireless carrier, offered 2.75 of its shares for each outstanding common share of Leap. Based on Friday's closing stock prices, that values the bid at $75.04 per share, or $5.3 billion.

San Diego-based Leap was not immediately available for comment.

The deal would combine two companies with similar strategies. Both differ from larger rivals Verizon Communications (VZ.N: Quote, Profile, Research, Stock Buzz) and AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz) because they charge flat monthly fees for unlimited calls and do not tie customers to contracts.

MetroPCS, which is based in Dallas, said it expected the merger to create synergies of about $2.5 billion, worth an additional $12.34 per share to Leap shareholders.

The deal's exchange ratio offers a 3.5 percent premium to Leap's most recent closing price. Investors bought up shares of the company in early trading and pushed the stock above the offer price, an indication they expect a higher bid at some point.

Leap shares were up $7.50, or 10.3 percent, at $80 in early Nasdaq activity after rising to $82.59 earlier in the session. MetroPCS gained 51 cents, or 1.9 percent, to $27.80 on the New York Stock Exchange. MetroPCS disclosed the offer in a statement that included a copy of the Sept. 4 letter to Leap's board. It said it would like to enter into a period of due diligence soon to close the deal in spring 2008.