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What: Shares of Leap Wireless (UNKNOWN:LEAP.DL) have leapt higher today by more than double, up by 116% at the high, following news that AT&T (NYSE:T) has agreed to acquire the pre-paid carrier.

So what: Ma Bell has offered $15 per share in cash, valuing Leap at $1.2 billion. In addition, Leap shareholders will receive the net proceeds from the sale of spectrum in Chicago, which Leap purchased last year for $204 million. That partially explains why shares traded as high as $17.25 this morning.

Now what: The proposed merger will bolster AT&T's spectrum position, although it will also attract regulatory scrutiny for the same reason. AT&T will also acquire Leap's customer base of approximately 5 million prepaid subscribers, strengthening its numbers in that market segment. The transaction will face the usual hurdles of shareholder votes, regulatory approvals, and other customer closing conditions, but AT&T hopes to seal the deal within six to nine months.

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Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.