Rival Bid to Sprint Nextel Merger Rumored To Be In the Works

By Brian Eriksen Noer, InvestingInWireless.com
December 2004

Sprint FON Group (FON) is expected to announce details of its $36 billion merger pact with Nextel Communications Inc. (NXTL) later this week. A ghost in the machine has emerged, however as an alleged rival bid has been reported for the acquisition of Nextel. Industry insiders are speculating that Verizon – or its UK based partner Vodafone UK – could be planning a counter-bid for Nextel, or even for Sprint itself.

Anti-trust experts project that while Sprint Nextel merger is expected to be approved, any merger activity involving Verizon may not pass regulatory muster, given Verizon’s huge presence in both wireless and land line telephone business. Representatives of both Sprint and Nextel have repeatedly declined to comment. 

Under the Sprint Nextel merger, it is planned that Nextel shareholders will receive the equivalent of 1.3 Sprint shares in paper and cash. This transaction would include Sprint shares with a 5-10 per cent cash component. A little more than 50 per cent of the merged company would be owned by Sprint shareholders. This would allow Sprint's fixed-line business to be spun off on a tax-free basis. Today, Sprint jumped 71 cents to $24.85, Nextel upped 18 cents to $29.94, and Verizon climbed 45 cents to $41.25.

Brian Noer

Brian Noer has a degree in Business and Economics from the University of Western, Ontario. His career in the financial markets spans fifteen years and several continents, including: Manager with The Bank of Montreal in Canada, Associate Analyst with the structured finance group at Moody’s Investor Services in the UK, and Editor for several financial trade magazines in the UK for both Thomson Financial Publishing and Euromoney PLC (titles include Thomson’s trade magazines “The International Securitisation Report”, and “Capital Market Strategies”, and Euromoney’s “Asset Finance International”). Brian recently joined the InvestorIdeas.com portal team as a Writer, Editor and Research Associate.

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