Sprint and Nextel announced a merger of equals
Sprint and Nextel announced today that their boards of directors have unanimously approved a definitive agreement for a merger of equals. The new company will be called Sprint Nextel. It will have robust wireless network capabilities, including Nextel's current nationwide 800MHz/iDEN network, Sprint's national 1.9GHz/CDMA network and Sprint's nationwide deployment of wireless EV-DO. Sprint Nextel's plans include migrating over time Nextel push to talk service to Sprint's CDMA EV-DO network. Sprint and Nextel currently have a combined total equity value of about $70 billion. They serve more than 35 million wireless subscribers as well as another 5 million subscribers through affiliates and partners. Sprint and Nextel shareholders will each own approximately 50 percent of the new company after the merger as Sprint and Nextel are being valued equally in the merger. Existing Sprint shares will remain outstanding and each Nextel common share will be converted into new company shares and a small per share amount of cash, with a total value equal to 1.3 shares of Sprint Nextel common stock. The exact stock/cash allocation will be determined at closing of the merger in order to facilitate the spin-off of the local telecommunications business on a tax-free basis. The aggregate amount of the cash payment will not exceed $2.8 billion. If the stock/cash allocation was calculated today, it is estimated that Nextel shareholders would receive about 1.28 Sprint Nextel shares and about $0.50 in cash for each Nextel share. Sprint Nextel will have its executive headquarters in Reston, Va., and its operational headquarters in Overland Park, Kan. The new company's common stock will be listed on the New York Stock Exchange. The merger is expected to close in the second half of 2005 and is subject to shareholder and regulatory approvals, as well as other customary closing conditions.