MetroPCS sees value in merger with Leap Wireless

By Lisa Kerner

Charlotte, N.C., Sept. 4 - MetroPCS Communications, Inc. proposed a strategic stock-for-stock tax-free merger with Leap Wireless International, Inc.

The proposal calls for each outstanding share of Leap common stock to be exchanged for 2.75 shares of MetroPCS common stock for an estimated value of $77.89 per share. The total equity value of the deal is $5.5 billion including $2.0 billion of Leap's existing debt.

MetroPCS expects synergies of $2.5 billion if the companies combine, for an added value of about $12.34 for each share of Leap common stock.

"We believe that the combination of MetroPCS and Leap is extremely compelling and will create significant value for the stakeholders of both companies," MetroPCS chairman and chief executive officer Roger D. Linquist said in a company news release.

"The combined company will create a new national wireless carrier with licenses covering nearly all of the top 200 markets in the United States."

MetroPCS, in an open letter to Leap's stakeholders, said it is "prepared to move very promptly to undertake the necessary due diligence and negotiate and finalize a transaction." The company is being advised by Bear, Stearns & Co. Inc.; Baker Botts LLP; Skadden, Arps, Slate, Meagher & Flom LLP and Paul, Hastings, Janofsky & Walker LLP.

"By moving expeditiously to enter into a definitive merger agreement, we would expect that this proposed transaction could close in the spring of 2008," Linquist added in the letter to Leap.

MetroPCS is a Dallas-based wireless communications service provider.

San Diego-based Leap is also a wireless services provider.

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