U.S. antitrust regulators gave clearance to a proposed $483 million merger between Sprint Nextel Corp. (S) and Virgin Mobile USA Inc. (VM), media reported Monday, citing a notice released by the Federal Trade Commission, or FTC. The deal could be subject to review by the FTC, the reports noted.
It was on July 28, that Sprint Nextel announced its agreement to buy Virgin Mobile USA, aiming to boost its position in the fast growing prepaid segment. Amid the ongoing economic slowdown, more people are looking towards cheaper prepaid plans that don't require lengthy service contracts.
The deal between Sprint Nextel and Virgin Mobile, which would make Sprint the third-largest wireless provider, is expected to close in the fourth quarter of 2009 or in early 2010.
Under the agreed deal, Virgin Mobile USA shareholders would receive shares of Sprint common stock, and cash in lieu of fractional shares. Public shareholders, who owns about 43.3% of Virgin Mobile USA, will receive $5.50 per share for each Virgin Mobile USA share held. This represents a premium of a 31% to Virgin Mobile's the closing share price of $4.21 on the previous day of the announcement.
U.K. Billionaire Richard Branson's Virgin Group, which holds 28.3% of Virgin Mobile USA, will get $5.12 for its common shares and $8.50 for its preferred stock. South Korea's SK Telecom Co., with a 15.3% stake, will get about $4.94 per common share and $8.50 per preferred share.
Sprint, which already owns 13% of the company, also has agreed to retire all of Virgin Mobile USA's outstanding debt, which is expected to be no more than $205 million net of cash and cash equivalents on September 30.
S closed Monday's regular trading session at $3.83, down $0.07 or 1.79%, on a volume of 39.7 million shares, and VM settled at $4.81, down $0.09 or 1.84%, on a volume of 854,325 shares.
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