Sprint stock surge gives board more sway for a MetroPCS bid

Sprint Nextel Corp.’s Dan Hesse and his board are expected to meet for the second time this year to consider whether to buy MetroPCS Communications Inc. The verdict may be different this time.

Hesse, Sprint’s president and chief executive officer, is evaluating a bid after watching Deutsche Telekom AG swoop in with a deal to merge its T-Mobile USA business with MetroPCS, according to people familiar with the matter. Sprint’s board rejected a MetroPCS takeover plan in February because it was too costly, people with knowledge of the talks said at the time.

Following a surge in its stock price, Sprint may be more likely to make a deal now, said Chris Larsen, an analyst at Piper Jaffray & Co. The shares have more than doubled since February, giving Sprint more buying power. Investors also are signaling that they want the company to be part of the industry’s consolidation, Larsen said. That could put pressure on the board to act.

“A Sprint counteroffer may just make sense,” Larsen, who is based in New York, said in a report. The company could pay $15 a share for MetroPCS, which closed at $12.69 yesterday, and still profit from the deal, he said.

Sprint, the third-largest U.S. wireless carrier, is crunching the numbers and holding talks with its advisers to weigh the feasibility of a higher offer, said the people, who asked not to be identified because the discussions are private. The Overland Park, Kansas-based company’s board is meeting to discuss the matter and could decide as early as next week whether to pursue a deal, the people said.

M&A Executive

Sprint also said yesterday that Keith Cowan, its president of strategic planning and corporate initiatives, will delay his planned departure by three months until January. Since he handles mergers and acquisitions, the move may suggest Sprint is considering a bid, Jennifer Fritzsche, a Wells Fargo & Co. analyst in Chicago, said in a note.

Scott Sloat, a Sprint spokesman, declined to comment on whether the company is evaluating potential counterbids. Andreas Fuchs, a Deutsche Telekom spokesman, also declined to comment on a potential bid by Sprint, as did MetroPCS.

Deutsche Telekom is proposing a reverse merger that would make T-Mobile a publicly held company. Investors haven’t responded favorably to the complex deal, sending MetroPCS shares down 9.8 percent on the day the details of the transaction was announced. Shareholders would rather see a straight acquisition than a reverse merger, Larsen said.

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus