Tuesday, November 22, 2005

Sprint to buy Alamosa for $3.4 billion

BusinessWeek reports that Sprint Nextel will acquire Alamosa Holdings Inc., its largest Sprint-branded wireless affiliate, for $3.4 billion. Regarding the determintaion of how much Sprint Nextel must pay to buy the remaining two-thirds of Nextel Partners that it doesn't already own, Wachovia Securities analyst Jennifer Fritzsche noted that "Nextel Partners generally trades at higher values than Alamosa and that the appraisers must treat the Nextel Partners acquisition as if there were competitive bidders, which were lacking in the Alamosa deal." She said, "As such, we believe this clause could merit an even larger premium for (Nextel Partners) shares."

Roger Entner at Ovum disagreed saying the "two companies are much different in terms of the type of subscribers they have and the technology they use." He thought the Alamosa deal shouldn't determine the Nextel Partners price. Entner said, "It certainly has impact on expectations, but expectations and actually achieved price are two separate things."