Leap turns down unsolicited proposal from MetroPCS

By Lisa Kerner

Charlotte, N.C., Sept. 17 - The board of directors of Leap Wireless International, Inc. unanimously determined that the unsolicited offer for the company by MetroPCS Communications, Inc. is not in the best interests of Leap or its shareholders.

MetroPCS said it is "disappointed" by the rejection of its offer to "create a new national wireless carrier."

In a Sept. 16 letter to MetroPCS chairman and chief executive officer Roger Linquist, Leap cited poor timing and the offer's failure to take into account Leap's robust growth prospects as reasons for the rejection.

"Leap is well-positioned to take advantage of strong organic growth and strategic opportunities and your proposal would unfairly dilute the ability of our shareholders to recognize these benefits," Leap president and CEO S. Douglas Hutcheson said in the letter.

On Sept. 7, Leap's board announced it would review the unsolicited Sept. 4 proposal from MetroPCS with the assistance of Goldman, Sachs & Co., Jeffrey Williams & Co. LLC, Wachtell, Lipton, Rosen & Katz, and Latham & Watkins, LLP.

It was previously reported that the MetroPCS proposal called 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 deal was valued at some $5.5 billion including $2.0 billion of Leap's existing debt.

"The contacts we have had with a number of Leap's shareholders indicate that they want to see a combination of our two companies happen without unnecessary delay," Linquist said in a company news release.

"Leap's response does not change our firm belief in the strategic and financial merits of our proposal. We continue to believe strongly in our prospects as a stand-alone company and that our proposal of 2.7500 shares of MetroPCS common stock for each share of Leap is full and fair."

MetroPCS said over the next six to eight quarters, it plans to enhance value through new market launches in Los Angeles, New York, Philadelphia and Boston.

The company also reiterated its view that a combination of MetroPCS and Leap would result in substantial synergies and complementary footprints.

MetroPCS, a Dallas-based wireless communications service provider, was advised by Bear, Stearns & Co. Inc.

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

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