MetroPCS bids $5.12 billion for wireless rival

updated 9:30 a.m. ET Sept. 4, 2007

DALLAS - Discount wireless phone service provider MetroPCS Communications Inc. on Tuesday offered to buy rival Leap Wireless International Inc. in a stock deal valued at about $5.12 billion.

MetroPCS, which offers prepaid phone plans, said it would also assume or refinance $2 billion of Leap debt as part of the transaction.

The company offered to pay 2.75 shares of its stock for each share of Leap. Based on the $27.29 closing price of MetroPCS shares on Friday, 2.75 shares would be worth about $75.05. That represents a premium of 3 percent to Leap's closing price of $72.50 on Friday. With about 68.2 million Leap shares outstanding at Aug. 3, the MetroPCS offer would be worth about $5.12 billion.

Based on the average weighted price of MetroPCS shares over the previous 20 days, the deal values Leap at $5.5 billion, the company said.

"The combined company will create a new national wireless carrier with licenses covering nearly all of the top 200 markets in the United States," MetroPCS Chairman and Chief Executive Roger Linquist said in a statement.

Under terms of the deal, MetroPCS would own about 65.4 percent of the combined company, it said. The company also forecasts cost savings of about $2.5 billion.

The MetroPCS proposal is subject to due diligence, approval by MetroPCS' and Leap's respective boards and shareholders, as well as customary regulatory approvals.

Bear, Stearns & Co. is acting as financial adviser to MetroPCS, and Baker Botts LLP, Skadden, Arps, Slate, Meagher & Flom LLP and Paul, Hastings, Janofsky & Walker LLP are acting as legal counsel.

Shares of MetroPCS fell 29 cents to $27 in premarket trading, while shares of Leap jumped $9, or more than 12 percent, to $81.50.

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