AT&T to buy Leap Wireless for $1.19 billion in cash

Fri Jul 12, 2013 6:38pm EDT
 
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(Reuters) - 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 statement.

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 Sprint.

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.   Continued...

 
The AT&T logo is pictured by its store in Carlsbad, California, April 22, 2013. REUTERS/Mike Blake