Sprint (S) Could Counterbid for MetroPCS (PCS) by Next Week; Holds on to Key M&A Exec
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Sprint (NYSE: S) is trading higher Friday following an arguably tumultuous week which saw shares drop to $4.80 at one point on word that MetroPCS (NYSE: PCS) and Deutsche Telekom have been in talks over a possible combination of PCS with DT's T-Mobile USA unit.
See, Sprint was supposed to marke a bid for and then acquire PCS. The story isn't over through.
The Board of Sprint is expected to meet for the second time this year in order to discuss a possible counter-bid for PCS. An initial bid was being mulled in February, though the idea broke down following evlauation that the purchase would be too expensive.
PCS shares are now well above peaks at $12 the stock hit in February. That might seem expensive until you realize that it's only a 6 percent to 7 percent gain; Sprint shares are up over 100 percent since February, giving it much more clout to launch a bidding war.
One analyst said Sprint could pay $15 per share for PCS and still come out ahead.
Notably, Sprint said yesterday that its strategic planning president, Keith Cowan, would now be staying with the company through the end of December, hinting that Sprint might be aiming for a bid. Cowan typically handled M&A activity for Sprint.
Making more sense for the deal between Sprint and PCS to happen is networks; both companies run on CDMA while T-Mobile uses the GSM format. Though all three are pushing forward with LTE expansion, an integration would be more of a headache -- and more costly -- for T-Mobile to complete.
For PCS, it isn't just a matter of saying "no deal" to T-Mobile. The companies will need to pay a break up fee if the deal doesn't go through, with PCS currently having a liability of $150 million. Sprint would likely opt to cover that in a bid, but that would eat into potential profit on the deal.
Sprint is expected to make a decision and announcement sometime next week. Shares are up 2.8 percent today, while PCS is modestly higher on the session.
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See, Sprint was supposed to marke a bid for and then acquire PCS. The story isn't over through.
The Board of Sprint is expected to meet for the second time this year in order to discuss a possible counter-bid for PCS. An initial bid was being mulled in February, though the idea broke down following evlauation that the purchase would be too expensive.
PCS shares are now well above peaks at $12 the stock hit in February. That might seem expensive until you realize that it's only a 6 percent to 7 percent gain; Sprint shares are up over 100 percent since February, giving it much more clout to launch a bidding war.
One analyst said Sprint could pay $15 per share for PCS and still come out ahead.
Notably, Sprint said yesterday that its strategic planning president, Keith Cowan, would now be staying with the company through the end of December, hinting that Sprint might be aiming for a bid. Cowan typically handled M&A activity for Sprint.
Making more sense for the deal between Sprint and PCS to happen is networks; both companies run on CDMA while T-Mobile uses the GSM format. Though all three are pushing forward with LTE expansion, an integration would be more of a headache -- and more costly -- for T-Mobile to complete.
For PCS, it isn't just a matter of saying "no deal" to T-Mobile. The companies will need to pay a break up fee if the deal doesn't go through, with PCS currently having a liability of $150 million. Sprint would likely opt to cover that in a bid, but that would eat into potential profit on the deal.
Sprint is expected to make a decision and announcement sometime next week. Shares are up 2.8 percent today, while PCS is modestly higher on the session.
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