Sprint Nextel Strikes $6.5B Buyout Deal


Sprint Nextel Corp. has agreed on a price to buy up the outstanding shares of rural service affiliate Nextel Partners Inc. in a deal worth $6.5 billion.

The newly merged wireless and wireline carrier has agreed to a $28.50 share price to buy out the 68.6% of Nextel Partners’ class-A common stock it doesn’t already own. Based in Kirkland, Wash., Nextel Partners sells wireless-communications services under the Nextel brand in midsized and rural markets in 31 states.

The purchase is part of a put-right clause in Nextel Partners’ charter forged with Nextel prior to Nextel’s merger with Sprint. Under that clause, Nextel Partners shareholders had the right to call for a put-right buyout of the remaining Nextel Partners shares. Nextel Partners shareholders voted to do just that in October.

Sprint agreed to the $28.50-per-share price based on estimates from investment houses Morgan Stanley and Lazard Ltd. Morgan Stanley put the total share value of Nextel Partners at $9.6 billion, or $29.75 per share, while Lazard set a fair-market value of $8.8 billion, or $27.25 per share. The $28.50 share price is the average of the two estimates.

As a result, the 68.6% share purchase will be worth $6.5 billion, including payments for conversion of debt securities and options settlements.

"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," Sprint Nextel CEO Gary Forsee said in a release.

The share price will hold unless a notice of a shareholder challenge is submitted by Jan. 9. Federal regulators also must sign off on the transaction, and that is expected to come by the end of the second quarter of 2006.