KIRKLAND, Wash.-Sprint Nextel Corp. will purchase the 68 percent of Nextel Partners Inc. it does not currently control for $6.5 billion, the two companies announced today.
Nextel Partners had the right to require Sprint Nextel to buy the remaining interest of the company that Sprint Nextel did not already own after Sprint Corp. acquired Nextel Communications Inc on Aug. 12. Nextel Partners shareholders invoked the put option in October, triggering an appraisal that determined the purchase price.
The purchase price of $28.50 per share of Partners’ Class A stock was a compromise between market values determined by two appraisers, Nextel Partners’ appraiser Morgan Stanley (which estimated Partners’ value to be $29.75 per share) and Sprnit Nextel’s appraiser Lazard (appraisal of $27.25 per share). According to Nextel Partners’ charter, the two prices were averaged since they were within 10 percent of one another. The purchase price provided Nextel Partners with a total value of about $10 billion.
“We believe that, aligned with Sprint Nextel, we are poised to move to the next level,” said John Chapple, chief executive officer and president of Nextel Partners. “This is an across-the-board success. It results in an attractive price and provides certainty for all Nextel Partners shareholders.”
The struggle over what price Sprint Nextel would pay to acquire Nextel Partners threw both companies into court, with Sprint Nextel arguing that Nextel Partners’ value had been inflated after the Nextel merger and Partners brushing the claim aside and crediting strong operational performance for the increase in value.
“As we work through the regulatory approval processes, we intend to focus on plans for efficiently integrating Partners’ business into our operations in a way that is seamless for customers and employees,” said Sprint Nextel CEO Gary Forsee.
The transaction must receive regulatory approvals and is expected to close in the second quarter of 2006. The put price is final and binding on all Nextel Partners shareholders, unless they opt to challenge the price, in which case they would receive a price “estimated to be well below the put price.”
