Seriously, our news feeds yesterday and today were absolutely dominated by the MetroPCS bid to buy Leap Wireless. And why not? This isn’t Verizon buying Ramcell or AT&T buying Dobson, after all. It’s a regional carrier with an increasing presence looking to purchase another regional carrier. From an observer’s standpoint — and discounting the financials — this seems like an obvious match. Financials are involved, of course, which may hold this deal up temporarily. On the surface, it would appear that Metro kinda lowballed Leap on this deal. Once again, we’re not financial experts, but we know that an offer of three percent over trading value (i.e., the price of the stock) is a rather low offer. So it seems there might be a cat and mouse game at play. Metro disagrees. Leap’s stock has been rising since April, which not coincidentally was when MetroPCS went public. Talks began then of this merger made in heaven, and Metro believes that Leap’s stock benefited immensely from that. It also surged over the last couple weeks in August. This was after the smoke had cleared from Leap’s disappointing earnings from the second quarter of this year. Metro presents a compelling case for its offer being fair. Investors, though, think it’s a bit low, and pumped up the stock yesterday to reach the level of the bid. This means that the three percent above price offer by Metro is now an at-price offer — though the offer doesn’t take that into account. This is because if the deal does not go through, Leap’s shares would be expected to head back to normal, or below normal, levels. Confused yet? We kind of are. But we’re in this together, right? If you have any questions, leave ’em in the comments. We’ll make sure to respond to all of ’em. But the overall point is that, as in most negotiations, the initial offer will have to be sweetened a bit before a deal is reached. [The New York Times]]]>
