Leap Wireless (LEAP) Higher As Sale Seen as Best Option

August 10, 2012 11:10 AM EDT
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Speculators are paying attention to beaten-up prepaid wireless carrier Leap Wireless (Nasdaq: LEAP) after Bloomberg's Real M&A highlighted the company as a buyout target.

While losses have been piling up every year since 2006, the company is the cheapest among all carriers with a market cap above $100 million, Bloomberg data showed. In addition, the company owns wireless spectrum said to be valued at $3 billion, although the entire market cap of the company is only around $400 million.

Leap shares were slammed 19 percent on August 7th following disappointing second quarter results, which showed subscriber defections. The losses overshadowed news the company will review options, including a possible sale.

A sale is the "best hope" for investors, Michael Mahoney, a senior managing director at Falcon Point told Bloomberg. He sees the stock possibly doubling in the event of a takeover. AT&T (NYSE: T) Inc., Verizon Wireless (NYSE: VZ) Sprint Nextel Corp. (NYSE: S) and T-Mobile USA may all be interested in the company's spectrum "their greatest value," according to Mahoney.

Steve Sweeney, an analyst at Pivotal, this the stock is worth $16 per share on a sale of the entire company.

"Leap management has made it clear from their comments on the conference call that they would be willing to come to the table and examine all options including a sale," Sweeney said. "Eventually, yes, I think Leap gets acquired."

Shares of LEAP are up 3.8 percent mid-day to $5.15.

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