MetroPCS withdraws merger offer for Leap Wireless
- 05 November, 2007 10:12
After being turned down earlier this year, it seems that MetroPCS is calling off its proposed marriage with Leap Wireless for good.
Claiming it has been unable to engage in any "meaningful negotiations" with Leap Wireless over the last two months, MetroPCS announced that it officially is withdrawing the merger proposal that was publicly unveiled in September.
"MetroPCS believes strongly in its stand-alone prospects and will continue to focus on realizing its significant growth opportunities," the company said in a statement.
Initially, MetroPCS had proposed a merger between the two companies that would have given Leap Wireless shareholders 2.75 shares of MetroPCS common stock in exchange for each Leap Wireless share.
MetroPCS claimed at the time that the merger would create a new national wireless carrier, even though the two companies' estimated combined subscriber base of 6.2 million still would be dwarfed by Verizon, AT&T and Sprint Nextel, which each claim more than 50 million subscribers. Additionally, MetroPCS CEO Roger Linquist said at the time that a Metro-Leap merger would create a carrier that would have "licenses covering nearly all of the top 200 markets in the United States."
But MetroPCS' hopes for a quick marriage were dashed when Leap Wireless CEO Doug Hutcheson spurned the company's offer just weeks after it went public. Hutcheson said that MetroPCS' proposal failed to "reflect Leap's strong growth prospects and the foundation that we have put in place to capitalize on the significant opportunities in our industry." At the time, Leap spokesman Greg Lund said the company would still be open to merging with MetroPCS if the company felt it had the right offer.
Both companies focus on prepaid wireless services to customers with less-than-stellar credit ratings, including the youth market. The company has built up a presence in larger US metropolitan areas, while Leap is considered stronger in suburban and rural areas.