Sprint, Nextel move forward with merger

Dec 15 2004 - 04:11 AM ET | Nextel, Sprint Nextel
sprint nextel merger In today's Wall Street Journal is the news [paid subscription req.] that Sprint and Nextel are moving forward with the planned merger, despite a possible threat from #2 wireless carrier Verizon Wireless. A deal should be announced later today, keeping the schedule that MobileTracker noted several days ago. Sprint will agree to pay 1.3 shares of Sprint (FON) plus a small amount of cash for each share of Nextel (NXTL). Without the cash and based on share prices at Tuesday's close, this works to a 9% premium on shares of Nextel. bq. The boards of Sprint Corp. and Nextel Communications Inc. were on the verge of approving late last night a $35 billion merger agreement that would create a U.S. cellular giant with roughly 38.5 million subscribers.

The two companies were expected to announce a deal today at the St. Regis hotel in New York. The deal will address a concern that rival Verizon Wireless will make a bid for Verizon Wireless--$1 billion must be paid to any company that breaks the agreement. Sprint will enter in a close 3-way race for the top US wireless carrier with nearly 39 million customers. bq. Company executives are expected to outline a target of $12 billion in cost savings from the combination. The deal is expected to close within six to nine months and face little regulatory opposition. The new company is expected to sell Sprint's existing landline business to focus solely on wireless.