Sprint, Virgin settle lawsuits, clear path for acquisition

Virgin Mobile, one investor filed suit, claiming that Virgin settled for “substantially below” its market value. This was not the only suit of its kind. Four more investors filed suit in New Jersey state court, and another two filed in New Jersey federal court. The two parties removed those obstacles this week, agreeing to settle the suits. This leaves just one hurdle in the way before the deal can close. While the settlement is not yet official, Sprint has reached a memo of understanding, which notes that the case will be settled based on certain criteria. For Sprint this means sharing more information about the structure of the deal, as well as the negotiations that preceded it. This will presumably include accounts of the mystery bidder, though the company’s name may remain anonymous. With these seven lawsuits out of the way, only iPCS’s suit remains between Virgin and Sprint. iPCS, a reseller of Sprint services in Midwest markets, filed suit in September, citing an non-compete agreement it has with Sprint. In certain Midwest markets iPCS is granted exclusive resale rights, meaning Sprint cannot enter those markets to compete. Last year iPCS won a similar suit against Sprint, relating to the Nextel acquisition. The current claim is similar in nature. Many dealers sell Virgin Mobile phones and service in those Midwest markets, meaning the parent company, Sprint, would be in competition with iPCS. Sprint has called the suit “without merit,” but that is not for them to decide. For now, their acquisition will have to wait until they can either get a judge to see things their way, or else settle with iPCS.]]>