Nokia up on Enpocket acquisition; SunCom lifted by T-Mobile merger; Leap shoots down MetroPCS' bid

By Sheri Kasprzak

New York, Sept. 17 - Several wireless names grabbed headlines to kick off the week, led by news that Finnish mobile phone giant Nokia Inc. plans to buy Enpocket, a mobile advertising company.

Market analysts said Monday that the move means Nokia is serious about moving into the mobile advertising sector and lauded the move as being good for both Enpocket and Nokia.

Another mobile titan, T-Mobile USA, Inc. will buy SunCom Wireless Holdings, Inc. in a $2.4 billion deal.

The merger is expected to close in the first half of 2008.

The move by T-Mobile, an analyst said Monday, is smart since it will expand its coverage area.

Elsewhere in the wireless sector, Leap Wireless International, Inc. blew off MetroPCS Communications, Inc.'s recent bid to buy the wireless provider in a $4.7 billion offer, claiming the move is not "in the best interest of Leap and its shareholders." Translation? The price is not right.

The move sent shares of Leap down slightly.

In other tech news, InfoSpace, Inc. is selling its online directory business to Idearc Inc. in a $225 million cash transaction.

The move sent shares of InfoSpace up by more than 30%. Shares of Idearc were down slightly.

Nokia shares up

Shares of Nokia were up almost 2.3%, or 77 cents, just before the opening bell. Right after the market opened Monday, the stock was up 86 cents, or 2.56%. The stock closed the day up 48 cents at $34.11 (NYSE: NOK).

"It will make them a serious player in that particular sector," said one analyst on Monday when asked about the acquisition. "Seems to be a good move for them. I don't know what the terms are but ultimately I think it will pay off for them."

A sell-side trader said he feels investors were responding positively to the news.

"It means a new business enterprise for them," he said. "Investors are responding to that news. It will be beneficially to Nokia in the end, I'm sure."

On Monday, HSBC upgraded Nokia to overweight from neutral.

The terms of the Enpocket purchase were not disclosed Monday but the acquisition will allow Nokia to accelerate its mobile advertising business.

"Nokia has already announced its intention to be a leading company in consumer internet services and we believe that mobile advertising will be an important element in monetizing those services for our customers and partners," said Tero Ojanpera, Nokia's chief technology officer, in a statement released early Monday.

"Enpocket's mature leading-edge platform and people expertise are a strong fit with [Nokia's] existing capabilities in the mobile-advertising market. This acquisition is a game-changing move to bring the reach and dept of Nokia to organize the market across the world and make it easier for an ecosystem to develop."

The transaction is set to close in the fourth quarter.

"Effective interactive advertising on the mobile device can create tremendous value for the mobile industry while bringing new internet services to people around the world," said Mike Baker, Enpocket's chief executive officer, in a news release."

T-Mobile to buy SunCom

SunCom's stock was up on word that it will be purchased by T-Mobile USA.

The stock ended the day higher by 16.59%, or $3.65, at $25.65 (NYSE: TPC).

"It's a great deal for T-Mobile, practically a bargain," said one analyst. "They've moved into a rather large coverage area so that's a big plus for them."

SunCom's shareholders will receive $27 per share in cash and the purchase includes the net debt of $800 million SunCom had as of June 30. The acquisition price is a 22.7% premium to the company's $22 closing stock price on Friday.

The deal will be sealed in the first half of 2008.

The acquisition, a T-Mobile statement said, will enhance its network coverage in the Southeast and Caribbean.

SunCom serves customers in North Carolina, South Carolina, Tennessee, Georgia, Puerto Rico and the U.S. Virgin Islands.

"The strategic fit of the SunCom operations will make this a near-perfect acquisition," said Robert Dotson, T-Mobiles chief executive officer.

"It will round out our domestic footprint, allow us to serve 98 of the top 100 markets and will significantly benefit our financial position by reducing roaming expense. Furthermore, it will add a talented group of employees that will enable us to serve more than 1 million new SunCom customers with industry-leading national products and services available under the T-Mobile brand."

"We are extremely pleased to be combining with T-Mobile USA, a customer-focused, nationwide provider of wireless services, with whom we have been a longtime roaming partner," said Michael Kalogris, SunCom's CEO, in a statement.

"This transaction is a testament to all that SunCom has achieved - transforming this company through our financial and operational restructuring into the growing, profitable business it is today, while offering customers exceptional service and products. We look forward to building on this momentum as part of T-Mobile USA."

Leap denies MetroPCS bid

In other wireless news, Leap Wireless gave the thumbs-down to MetroPCS' recent $4.7 billion takeover bid.

Leap's stock dipped by 5 cents on Monday to close at $74.27 (Nasdaq: LEAP). MetroPCS's stock gained 9 cents to end the session at $25.19 (NYSE: PCS).

In a letter to MetroPCS' chairman and CEO Roger Linquist, Leap said the proposal "significantly discounts the contributions Leap would make to the combined company."

"The terms of your proposal do not reflect Leap's strong growth prospects and the foundation that we have put in place to capitalize on the significant opportunities in our industry," said a letter to Linquist.

"Leap's business enjoys the benefit of building on a proven platform that has enabled us to launch high-quality markets on a timely basis, resulting in increased subscriber growth over the past few years."

The letter also points out that Leap has invested "hundreds of millions of dollars" in equipment in an effort to debut its broadband offering. That offering is set to debut Tuesday.

Even so, the letter indicated some interest in MetroPCS, noting that the two companies share the same basic business model.

MetroPCS had offered $69.03 per share for Leap, a 14.4% discount to Leap's 60-day average trading price.

"You have proposed a merger in which our shareholders would receive shares of MetroPCS stock," said the letter. "However, your proposal does not address the status of the announced and pending transition of MetroPCS senior management."

InfoSpace to sell directory business

Elsewhere, Idearc agreed to buy the online directory business from InfoSpace in a $225 million cash transaction. The purchase is set to close at the end of the year.

The move sent shares of InfoSpace up 31.17%, or $4.13, to close at $17.38 (Nasdaq: INSP). After hours, the stock fell by 9 cents.

Idearc's shares were down 50 cents, or 1.5%, to close at $32.85 (NYSE: IAR). The stock gained 28 cents in after-hours trading.

"The sale of our directory business is part of the board of directors' ongoing review of our company and the opportunities available to enhance value for our shareholders," said Jim Voelker, InfoSpace's CEO, in a news release.

"In addition to unlocking the value of our directory business that was not reflected in the company's market valuation, this transaction is extremely tax efficient, allowing us to capitalize on our net operating losses to significantly maximize the cash proceeds from the sale."

Headquartered in Bellevue, Wash., InfoSpace is an online directory service.

PHH says merger conditions may not be met

In other news, PHH Corp. said it may not meet all of the requirements of its planned merger with Jade Merger Sub, Inc.

Shares of PHH plummeted by 14.95%, or $4.26, to end at $24.24 (NYSE: PHH).

Blackstone Group affiliate Pearl Mortgage Acquisition 2 LLC said JPMorgan Chase Bank NA, J.P. Morgan Securities Inc., Lehman Commercial Paper Inc., Lehman Brothers Inc. and Lehman Brothers Commercial Bank revised interpretations as to the availability of debt financing under their commitment letter.

Pearl Mortgage said Monday that this revision could result in a shortfall of up to $750 million in debt financing compared to the amount of financing viewed as being committed as available at the time the merger agreement was signed. Pearl Mortgage also said it is working to obtain additional financing in the interim.

General Electric Capital Corp. agreed to sell the mortgage operations of PHH to the Blackstone affiliate and to retain the PHH Arval fleet management services portion of the business.

"Pearl Acquisition further stated in the letter that it is not optimistic at this time that its efforts will be successful and there can be no assurances that these efforts will be successful or that all of the conditions to closing the merger will be satisfied," PHH said in a statement released Monday.

"We have advised GECC that we expect it to fulfill its obligations under the merger agreement. Notwithstanding this recent development, we intend to proceed with the special meeting of stockholders and to continue to seek to satisfy our conditions to closing the merger; although there can be no assurances that all of the conditions to closing will be satisfied or that the merger will close by the end of the year, if at all."

Based in Mount Laurel, N.J., PHH is an outsource provider of mortgage and vehicle fleet management services.

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