MetroPCS Communications Inc. on Tuesday offered to merge with rival Leap Wireless International Inc. to create a fifth national wireless carrier.
Dallas-based MetroPCS proposed a tax-free stock swap for a value of about $5.5 billion. It also would assume $2 billion of Leap Wireless debt and its shareholders would own 65 percent of the combined company. The deal, said MetroPCS, could provide $2.5 billion in synergies.
"The combined company will create a new national wireless carrier with licenses covering nearly all of the top 200 markets in the United States,” said Roger Linquist, chairman of the board and CEO of MetroPCS, in a prepared statement. “The shareholders of both companies will have the opportunity to participate in the upside potential of the combined company and our respective employees will benefit from being a part of a larger, more diversified organization.”
Leap Wireless would only say that it's reviewing the MetroPCS offer and has no comment beyond that.
Both companies target niche markets, from customers with poor credit who can’t get contracts with the big-name carriers, to ethnic minorities who want low-cost cellular phone service. Leap Wireless and MetroPCS also have a number of youth subscribers. Leap Wireless serves 2.7 million customers while MetroPCS has 3.4 million.
MetroPCS has been the subject of merger speculation ever since its impressive Wall Street debut earlier this year. Leap Wireless, headquartered in San Diego, is its biggest competitor. MetroPCS stocks were up 4.07 percent during early afternoon trading on Tuesday, at $28.40. Leap Wireless stocks had jumped 16.18 percent, reaching $84.23.
Leap Wireless International Inc. www.leapwireless.com
MetroPCS Communications Inc. www.metropcs.com
