Sprint Nextel Corporation has successfully wiped out another pending lawsuit against the company by snatching up Gulf Coast Wireless. The company also is buying another affiliate, IWO Holdings.
Gulf Coast Wireless' assets will cost Sprint Nextel roughly $287.5 million, which includes the assumption of the affiliate's debt. The deal will bring more than 95,000 PCS customers into the Sprint Nextel fold as direct subscribers.
As part of the agreement, Gulf Coast Wireless has requested a stay of litigation pending against Sprint in Louisiana. The deal, which is subject to regulatory approvals, is expected to close before the end of the year.
Separately, Sprint Nextel made a deal to acquire IWO Holdings for approximately $427 million. IWO's 237,000 PCS customers will become direct subscribers of Sprint Nextel as a result of the acquisition. The $427 million purchase price includes the assumption of $208 million in debt. IWO serves PCS customers in upstate New York, New Hampshire, Vermont and pockets of Massachusetts and Pennsylvania.
The IWO deal must be approved by IWO shareholders and get the necessary regulatory approvals before it can close, which is expected to happen in the fourth quarter.
Sprint's decision to merge with Nextel, a deal first announced last December, raised the eyebrows of several Sprint affiliates. Many of those affiliates have filed lawsuits claiming their territories overlap with some Nextel markets.
Sprint has settled some suits. The two acquisitions announced today mark the third such purchase by Sprint. The carrier snapped up US Unwired for $1.6 billion earlier this summer. As with the Gulf Coast Wireless buy, the purchase closed the book on US Unwired's pending litigation against the company.
The company is still tangled in a battle with Nextel Partners over its "put" option, which if approved would require Sprint Nextel to purchase the company. Sprint Nextel has said it wants the company appraised, but Nextel Partners believes that could undervalue the company.
Sprint Nextel became an official company in mid-August when the pending merger between the two then separate carriers closed. The combined company has more than 44 million subscribers and about 80,000 employees. Sprint Nextel is using the Sprint brand name, but the Nextel name still remains as a product brand.