February 26, 2012
Sprint Board Vetoes Proposed MetroPCS Acquisition
Sprint Nextel is abandoning plans to take over pre-paid wireless company MetroPCS after the company's board of directors vetoed the proposed multibillion purchase of the fifth-largest mobile telecom network in the U.S. -- despite CEO Dan Hesse's support of the deal -- various media outlets have reported.
According to Jennifer Van Grove of VentureBeat, the transaction would have given Sprint an additional 9.3. million customers, as well as access to additional spectrum.It would have valued MetroPCS at $8 billion, and Van Grove, citing David Farber of CNBC, noted that negotiations were all but complete and the acquisition could have been announced following Sprint's board meeting last Wednesday.
Sources told Reuters' Paritosh Bansal and Sinead Carew, the board rejected the purchase "at the last minute" at that February 22 board meeting in what they refer to as "a surprise move that could throw the future" of the company's CEO "into question."
"The reasons for the board's decision could not be immediately determined, but another source familiar with the situation said there was no split between the board and Hesse," the Reuters reporters said. "Sprint's board and management decided to pull out because it was not the right time to do the deal, the source added."
The news agency contacted MetroPCS and Sprint, but both parties declined to comment.
"It is not clear why the Sprint board rejected the deal after“¦ Hesse endorsed it and after months of talks between the two companies had already taken place," Farber said, according to VentureBeat.
"I am told that regulatory concerns were not the reason the Sprint board vetoed the transaction, but again unclear as to why they would go against a deal that many of them were already well aware of," he added.
Stifel Nicolaus & Company analyst Christopher King told Bloomberg's Serena Saitto and Olga Kharif that, now that the takeover of MetroPCS is no longer an option, Sprint could turn their attention to another wireless firm, Leap Wireless International. He also said that T-Mobile could attempt their own takeover of MetroPCS.
As for the Sprint CEO, Roe Equity Research's Kevin Roe told Bansal and Carew that the board's veto of the deal was in effect "a vote of no-confidence" in Hesse, and that he was "on a short leash." King added that the move raises questions regarding his future with the company.
On the Net:
- Sprint Nextel
- Leap Wireless International
- Stifel Nicolaus & Company
- Roe Equity Research