Given the pummeling that shares of Leap Wireless
Does hindsight reveal to us that Leap should have taken the deal?
Well, if MetroPCS had offered $4.7 billion in cash for Leap, the answer would be easy: Leap blew it by not cashing out. But the merger was a stock swap deal, and MetroPCS shares have fallen in tandem with Leap, though not as drastically.
Soon after MetroPCS withdrew its merger offer, Leap announced that it would restate financial results going back more than three years, dinging revenue by $20 million over the period. After reporting third-quarter results that largely failed to impress analysts, Leap's shares now sit more than 40% lower than they did little more than a month ago. Yet while some peeved investors feel wronged, and have filed class action suits against Leap and its management, a stock merger wouldn't have saved them.
But the nixed deal did save MetroPCS a lot of headaches. The two regional players have enough on their hands dealing with competition from big boys AT&T
MetroPCS now has time to sit back and watch as Leap gets its house in order before floating merger talk again. Since the Federal Communications Commission mandates a "quiet period" prior to the auctions, Leap and MetroPCS can't discuss a merger until the auction is complete next year. Investors will just have to wait until spring to see whether a thaw comes or the chill remains between the two companies.
For more Foolishness:
- Leap to MetroPCS: Come Back With a Real Offer
- Friday's Worst Stocks in the World
- Top-Rated Stocks in the Bargain Bin
Fool contributor Dave Mock wears shorts in the winter, just to shake things up a little. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Sprint Nextel is an Inside Value recommendation. Printed out, the Fool's disclosure policy doubles as a paper hat or airplane.