AT&T Looks to Acquire Leap for $1.19 Billion USD
July 15, 2013 11:09 AM
Leap shares closed at $7.98 Friday, and AT&T is making a cash offer of $15 per share for the acquisition
AT&T is looking to shell out over a billion dollars for the acquisition of Leap Wireless International Inc. -- which is nearly double its current value.
AT&T will reportedly spend $1.19 billion USD to acquire prepaid mobile service provider Leap Wireless. AT&T is doing this to gain additional wireless spectrum and increase its number of prepaid customers.
Leap shares closed at $7.98 Friday, and AT&T is making a cash offer of $15 per share for the acquisition. Leap shares jumped to $17 in after-hours trading.
The acquisition would mean that Leap cannot request other bids, but AT&T can match rival offers if they come along. AT&T also agreed to keep Leap's Cricket brand name.
In addition, there will be a sale of spectrum in Chicago, which Leap bought from AT&T in 2012 for $204 million USD. Leap shareholders will receive this money once the sale goes through.
AT&T will get all of Leap's stock and its 5 million prepaid subscribers. That's on top of AT&T's current 7 million prepaid subscribers out of 107 million wireless customers total.
The entire deal is valued at around $4 billion once AT&T's offer of $1.19 billion and Leap's $2.8 billion in debt are taken into account.
AT&T's attempted $39 billion acquisition of T-Mobile
was struck down
due to worries over competition, but since Leap isn't a major operator, many expect this deal to go through.
The deal is expected to close in about nine months, and will have a regulatory review.
AT&T is attempting to gain some ground from the U.S.' No. 1 carrier, Verizon Wireless. It has been announcing new changes to its wireless plans here and there in order to accomplish that goal, such as the
new 24-month upgrade policy
, which allows customers to upgrade their phones in 24 months instead of the current 20-month period. It applies to any customer whose agreement expires in March 2014 or later.
AT&T is also expected to make a
tomorrow, and many expect it to be either voice-over-LTE or Advanced LTE.
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