Sprint to buy Virgin Mobile USA

Tuesday 28 July 2009 | 14:35 CET | News
US mobile operator Sprint Nextel has agreed to buy Virgin Mobile USA, strengthening its position on the prepaid market. The takeover values Virgin Mobile's equity at USD 483 million, including Sprint's existing 13.1 percent stake in the company. In addition, Sprint will pay off all of Virgin's debt, estimated at a net USD 205 million at the end of third quarter. Sprint will maintain the Virgin Mobile brand alongside its own Boost Mobile, to target the two different customer segments. Following the closing of the transaction, Sprint's prepaid business will be led by Virgin Mobile CEO Dan Schulman. Matt Carter will continue to lead Boost Mobile and will report to Schulman. Sprint will pay in its own stock for the purchase. Public sharehodlers will receive stock worth USD 5.50 per Virgin Mobile share, the Virgin Group will receive USD 5.12 per share for its 28.3 percent stake and SK Telecom will receive USD 4.94 per share for its 15.3 percent stake. The trademark licensing deal with Virgin Group will continue, with Sprint paying USD 12.7 million for the name rights through end-2021. Sprint will also pay Virgin Group USD 50 million to gain access to tax Virgin Mobile's tax loss receivables. All of the payments, including the debt, can also be made in Sprint stock. The acquisition is expected to close in late Q4 or early 2010.

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