The Board of Directors of Leap Wireless International rejected the unsolicited acquisition proposal from MetroPCS Communications. In a public letter, Leap said the proposal failed to take into account its “robust growth prospects” given its track record in entering new markets, while criticizing the slower pace of rollouts at MetroPCS. Leap also complained that the MetroPCS offer of $69.03 of value per share to LEAP shareholders represents a 14.4% discount to Leap’s 60-day average trading price prior to the date of the proposal.
In response, MetroPCS Communications issued a statement expressing disappointment that Leap rejected its strategic stock-for-stock tax-free merger proposal to create a new national wireless carrier.
MetroPCS continues to believe strongly in its prospects as a stand-alone company and that its proposal of 2.7500 shares of MetroPCS common stock for each share of Leap is full and fair. Consequently, MetroPCS plans to proceed “as a disciplined buyer to review all of our options at this time and will not take any action that we believe would disadvantage our shareholders.”
MetroPCS also noted that its service will launch in Los Angeles this week. MetroPCS expects to cover approximately 11 million POPs initially at launch with over 400 authorized dealer locations. It should be noted that the incremental economic opportunity MetroPCS will enjoy in Los Angeles is roughly equivalent to all of Leap’s top five existing markets in operation combined, which based on licensed population includes Houston, Phoenix, San Diego, Denver and Pittsburgh. MetroPCS also said that it is on track to launch service in New York, Philadelphia and Boston in late 2008 or early 2009.
http://www.leapwireless.com
http://www.metropcs.comLeap offers mobile service 23 states and holds licenses in 35 of the top 50 U.S. markets. Through its flat-rate “Cricket” service plans, the company offers customers a choice of unlimited voice, text, data and mobile Web services.
