Newly merged wireless giant Sprint Nextel
But the new megacarrier's most important recent achievement is its mitigation of legal disputes. Several of Sprint's affiliate partners had filed suit against the company in an attempt to block the merger. That plan obviously failed, but the legal argument remains -- the Sprint/Nextel combination allegedly violates many of the affiliate agreements that Sprint signed to uphold.
Yesterday, Sprint Nextel announced that it has resolved disputes with twomore affiliates by buying them out. The company will shell out a total of about $714 million in cash and assumed debt to acquire both IWO Holdings and Gulf Coast Wireless. Earlier this year, Sprint paid $1.3 billion to acquire U.S. Unwired, resolving another lawsuit. It's not buying every affiliate, though; in some cases, it's renegotiating agreements to keep both parties from competing for customers.
When the merger was still up in the air, the U.S. Unwired deal had other affiliates scrambling to file suits in hopes of a lucrative buyout offer. Those efforts lost considerable leverage when regulators approved Sprint and Nextel's union.
These latest two deals also set an important benchmark -- Sprint Nextel's standard for what value "the market" places on affiliate companies. This is very important, because the biggest current thorn in Sprint Nextel's side is Nextel Partners
Clearly, Sprint Nextel isn't about to shell out cash willy nilly. Given the company's deft moves in the mergers-and-acquisition arena, affiliate shareholders counting on a premium buyout will likely be disappointed.
We've acquired related Foolishness:
- Sprint and Nextel hook up.
- Sprint builds a better trap and catches a mouse.
- Sprint and Nextel slip out of a tight knot.
Fool contributor Dave Mock values grape-flavored Otter Pops far above what most people would pay. The orange flavor, however, deserves no premium. He owns no shares of companies mentioned in this article.