iPCS settles with shareholders over Sprint buyout
Sprint Nextel affiliate iPCS has reached a settlement agreement with shareholders over a class-action lawsuit disputing Sprint’s pending buyout offer of the company.
The agreement comes one week before the expiration of Sprint’s $426 million buyout offer, which was made on Oct. 28.
iPCS has previously sued Sprint repeatedly over the terms of its affiliate contract, arguing that Sprint violated the terms of the agreement by offering competing services in iPCS’ markets. iPCS sued Sprint over its deal with Clearwire and pending acquisition of Virgin Mobile USA.
An appeals court recently upheld a previous ruling that Sprint had to stop offering Nextel-branded services in iPCS' territory, forcing Sprint to divest those assets. The buyout allows Sprint to keep the iDEN assets it previously planned to divest and stops all ongoing litigation between the two companies.
iPCS is one of a long string of affiliate carriers Sprint has bought out over the past several years. It currently resells Sprint services in 81 markets throughout Illinois, Michigan, Pennsylvania, Indiana, Iowa, Ohio and Tennessee.
As part of the buyout, Sprint will acquire more than 700,000 iPCS wireless subscribers and 270,000 wholesale customers. The deal also extends Sprint’s direct service territory to an additional 12.6 million people.
Separately, iPCS shareholder Greywolf Capital sent a letter to the iPCS board opposing the buyout by Sprint. In a statement, the company said “it is our opinion that the $24 takeout price reflects neither the fundamental business value of iPCS nor the value of iPCS's breach of contract claims against Sprint. This is a great deal for Sprint, but the price for iPCS shareholders is far too low.”
Greywolf declined to comment further on the matter, and it remained unclear by press time whether the iPCS settlement and the Greywolf letter were related. The letter was dated Nov. 16, two days before the settlement.