Amwal Al Ghad English - 2013-07-13 08:24:16
AT&T Inc. (T), the second-largest U.S. wireless carrier, agreed to buy Leap Wireless International Inc. (LEAP) for $1.2 billion, giving the company 5 million customers, more airwaves and a larger piece of the pay-as-you-go market.Under the deal, Leap shareholders also will get the right to proceeds from the sale of Leap’s 700-megahertz spectrum in Chicago, which was bought for $204 million last year, according to a statement. The offer of $15 a share in cash represents an 88 percent premium over Leap’s closing price of $7.98 yesterday. San Diego-based Leap also has $2.8 billion in net debt.
AT&T Chief Executive Officer Randall Stephenson has been on a hunt for spectrum -- the airwaves that let mobile devices make calls and download data -- ever since regulators blocked his $39 billion proposal in 2011 to acquire Deutsche Telekom AG’s T-Mobile USA unit. Since then, he’s resorted to smaller acquisitions, such as a $1.9 billion deal in January to acquire airwaves from Verizon Wireless, to build enough capacity to handle increasing demand for music downloads and video streaming on mobile devices.
“This is another example of the escalating value of spectrum as data pricing gets more competitive and data devices like tablets become more ubiquitous,” said Kevin Smithen, an analyst with Macquarie Securities USA Inc. He has the equivalent of a sell rating on AT&T and is neutral on Leap.
Leap more than doubled to as much as $17.78 in extended trading yesterday, reflecting the value of AT&T’s offer plus the Chicago spectrum proceeds. Investors may also expect a competing bid, Smithen said. More»