NEW YORK (Reuters) - Analysts said shares in Leap Wireless International Inc LEAP.O were up more than 6 percent on Wednesday because of speculation that AT&T Inc (T.N) was interested in buying the wireless service provider but at least two analysts were skeptical that such a deal would occur.
Representatives for AT&T and Leap declined comment.
Soleil/Nelson Alpha Research analyst Michael Nelson said the shares were boosted by merger and acquisition speculation, but said Leap would be much more likely to merge with MetroPCS PCS.N than to be acquired by AT&T.
“We have heard market chatter that AT&T may potentially acquire Leap, which we believe is unlikely,” Nelson said in a research note. “However, we continue to believe a merger with MetroPCS would make strategic and financial sense for both companies.”
Leap shares were up $1.12, or 6.8 percent, at $17.60 in afternoon Nasdaq trade. MetroPCS shares were up 22 cents, or 2.9 percent, at $7.94 on the New York Stock Exchange. Both Leap and MetroPCS shares have been under pressure since July due to concerns about slowing growth.
William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York, was also unconvinced by the rumors about Leap.
“This is not the first time Leap has been mentioned as a takeover candidate. Today, there are several rumors of companies being acquired and Leap was one of them. So I am skeptical of this rumor,” he said.
Leap spokesman Greg Lund declined comment on the company’s share price move or the AT&T rumor but noted that Leap has not changed its longstanding view that a MetroPCS deal could work.
“We have said that some sort of strategic collaboration with MetroPCS makes sense. We’ve not changed our view on that,” Lund said. He would not comment on whether the companies had made any progress toward a deal.
MetroPCS made a $5.5 billion bid to buy Leap in 2007 but the companies failed to agree on a deal price. Wall Street analysts still widely expect the low-cost wireless providers to combine at some point because they have similar business models and little network overlap.
AT&T and Leap target different market segments and use different network technologies.
Reporting by Sinead Carew; Editing by Gary Hill