Greywolf Capital Management, one of the main investors of iPCS, expressed its deep opposition to Sprint Nextel's proposed $831 million acquisition of the affiliate, and said Sprint's offer undervalues the company.
Sprint's $24 per share offer "reflects neither the fundamental business value of iPCS nor the value of iPCS's breach of contract claims against Sprint," the firm said. Greywolf, which has been an investor in iPCS since 2004 and has a 8.2 percent stake, said in a letter to fellow shareholders that an offer of $34 to $47 per share would be more reasonable.
"IPCS shareholders will receive a significant and immediate premium for their shares. We look forward to working with the Sprint Nextel team to ensure a smooth completion of the transaction," said an iPCS spokesman. Sprint spokesman Scott Sloat declined to comment.
When Sprint announced the iPCS acquisition, the carrier said that all litigation between the two companies would be settled. In early February, the Circuit Court of Cook County, Ill., ruled that Sprint had violated agreements with iPCS by operating its iDEN networks in territory in which iPCS had affiliate exclusivity rights. The court ordered Sprint stop owning, operating and managing the offending portion of the Nextel network by Jan. 25, 2010. Sprint said it will now no longer be divesting the operations.
In a somewhat related move, iPCS said it settled shareholder lawsuits related to the Sprint acquisition. As part of the settlement, iPCS will provide new details in a Securities and Exchange Commission filing to be submitted later today about why it supports the acquisition.
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