Sprint acquiring Virgin Mobile USA for $483 million

Sprint Nextel announced it will acquire Virgin Mobile USA for a total equity value of $483 million, which includes the value of Sprint's current 13.1 percent fully diluted ownership interest in the MVNO. According to Sprint, the acquisition bolsters its position in the prepaid segment, enhances cross-selling of a full suite of products and services across a larger target audience, and promises to yield general and administrative reductions, operational efficiencies and streamlined distribution. Sprint will pair Virgin Mobile USA with its Boost Mobile unit under one prepaid umbrella but will continue operating both brands, contending they deliver different value and appeal to different customer demographics--current Virgin Mobile CEO Dan Schulman will lead the prepaid business, and will report directly to Sprint CEO Dan Hesse. Boost president Matt Carter will continue to lead the division, and will report to Schulman.

Based on the terms of the agreement, Sprint currently expects to issue between 81.4 million and 104.7 million shares of its common stock in exchange for all Virgin Mobile USA common stock, excluding Sprint's current stake, and all Virgin Mobile USA preferred stock. In addition, at closing Sprint will retire all of Virgin Mobile USA's outstanding debt, which is expected to total no more than $205 million net of cash and cash equivalents on Sept. 30. After the transaction closes, Virgin Mobile USA will continue to license its brand from the Virgin Group under the terms of an amended and restated Trademark License Agreement--Sprint will pay $12.7 million for the initial term, which will continue through the end of 2021. The agreement contains renewal provisions to allow Virgin Mobile USA to extend the term until 2047.

For more on the Sprint/Virgin Mobile USA deal:
- read this release

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