Nearly two weeks after receiving a $4.7 billion buyout offer from MetroPCS, Leap Wireless’s board has decided that they’ll have to do better if the companies are to willfully merge. Leap sees the offer as slim, citing its 60-day average trading. MetroPCS feels that the offer is fair, since Leap’s shares are considered “overweight” by analysts, mainly because of potential merger talks over the summer. The rejection doesn’t meant that a deal won’t get done, but it puts a significant delay on proceedings, and it might affect the companies’ ability to bid on portions of the 700 MHz spectrum.
“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,” Roger D. Linquist, MetroPCS’s chairman and chief executive officer, said in a statement. “It appears that Leap’s board is ignoring the will of its shareholder base.”So where do they go from here? We still see this getting done, but there a number of things that could affect the outcome. For instance, what if Leap’s shares come tumbling back down to Earth this week? Would they then view Metro’s offer as a fairer one? What we don’t see is Metro upping its offer significantly. Maybe a tick over $5 billion, but not much more. The merger makes too much sense and benefits both companies too much to ignore. There is an emerging market not only for prepaid phone services, but for an alternative to the AT&Ts and Verizons of the world. The two companies can offer that alternative better as a cohesive unit than as separate entities. We’ll keep our eyes on their respective stocks during the week to see if anything’s afoot. [Bloomberg]]]>