Sprint to buy Virgin Mobile for $483 million
The nearly half-billion-dollar acquisition bolsters Sprint's prepaid offerings, which also include the Boost Mobile brand.
Sprint Nextel said Tuesday that it will buy Virgin Mobile USA for $5.50 per share in a stock deal valued at $483 million.
Sprint already owns 13.1 percent of the prepaid mobile operator. Virgin Mobile is a mobile virtual network operator, or MVNO, which means it uses another carrier's network to offer its service. The company uses Sprint's CDMA network.
The transaction, which is expected to be finalized in the fourth quarter of 2009 or in early 2010, represents a 31 percent premium over Virgin Mobile's Monday closing share price of $4.21.
Sprint also agreed to retire Virgin's outstanding debt when the deal closes. It doesn't expect Virgin Mobile USA's debt to be more than $205 million net of cash and cash equivalents by September 30.
The third largest nationwide wireless carrier in the U.S behind Verizon Wireless and AT&T, Sprint hassince its acquisition of Nextel. It has been plagued by a poor service reputation, and many customers have left the service. The company's new management team, headed by CEO Dan Hesse, has been trying to turn the company around and rebuild its public image. Earlier this summer, the company on its network.
Sprint reports second-quarter earnings on Wednesday morning.
The acquisition of Virgin Mobile will help Sprint bulk up its prepaid business. Sprint already owns the nationwide prepaid brand Boost Mobile.
Boost Mobile made waves earlier this year when it. Virgin Mobile, which is seen as one of Boost's main competitors in the prepaid market, soon .