IPCS Agrees To Settle Shareholder Lawsuit Over Sprint Deal
19 November 2009 - 3:48AM
Dow Jones News
IPCS Inc. (IPCS) said on Wednesday that it had agreed to settle
with shareholders who had sued in opposition to the company's
pending takeover by Sprint Nextel Corp. (S), partly clearing the
way for the deal.
IPCS shareholders believe that Sprint's offer of $24 a share is
too low, based on prior deals between Sprint and its affiliates.
Prior to the agreement, Schaumburg, Ill.-based iPCS was the largest
independent Sprint affiliate and a thorn in the side of the
nation's No. 3 wireless carrier. Taking out iPCS would remove a
pesky lawsuit over exclusive rights of an affiliate to sell Sprint
services in its own territory.
Terms of the settlement, as well as which shareholders were
involved, weren't disclosed, but iPCS is expected to provide more
details in a filing to the Securities and Exchange Commission later
Wednesday.
Sprint, based in Overland Park, Kan., had seemingly cleared up
the legal mess by agreeing to acquire iPCS for $426 million last
month. The per-share price of $24 was a 34% premium to the prior
day's closing price. Sprint also will assume $405 million in
debt.
But there has been opposition to this deal. Beyond the
shareholder lawsuit, Greywolf Capital Management LP said on Tuesday
that the deal doesn't reflect iPCS's fair value. The hedge fund
said a more suitable offer would be $34 to $47 a share.
Greywolf, which has been an investor in iPCS since 2004, said it
has long expected an eventual buyout by Sprint. But it called the
agreed-to price "far too low."
Its fight against the deal faces an uphill battle as the deal is
being backed by private-equity giant Apollo Management LP, which
hold a 8.1% stake in iPCS. Other company investors have also been
seen as backing the bid, and iPCS's directors have unanimously
recommended that shareholders sell their shares.
A Sprint spokesman couldn't immediately be reached for
comment.
IPCS shares fell 1 cent to $23.96, while Sprint shares retreated
2.7% to $3.60.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com
(Kathy Shwiff contributed to this article.)
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