Sprint Board Nixed MetroPCS Deal
Sprint Corp. (NYSE: S)'s management considered buying MetroPCS Inc. (NYSE: PCS) for $15 a share, but its board of directors rejected that idea -- at least for now, according to reports from the Wall Street Journal and others.
In a note issued Monday, UBS Research says Sprint remains a "natural buyer" of MetroPCS and that the deal could eventually get done.
But UBS analysts John Hodulik and Batya Levi caution that this deal's failure signals other problems at Sprint. For one thing, management's willingness to do a deal before even seeing the impact of its Network Vision plan is "cause for concern," they posit. (See Sprint to Launch LTE by Mid-2012 and Sprint: First LTE Site Is 'Up & Running'.)
The board's rejection of a management-led deal could also reveal a "disconnect" between management and the board, with the latter more focused on Network Vision. (See Sprint's iPhone Q4 Ouch!)
MetroPCS will likely remain attractive to Sprint because of the spectrum it owns and its success in the pre-paid market, UBS concludes.
— Carol Wilson, Chief Editor, Events, Light Reading