AT&T To Buy Leap Wireless For About $1.19 Bln

(RTTNews) - AT&T Inc. (T) Friday said it has agreed to acquire prepaid-wireless provider Leap Wireless International Inc. (LEAP) for about $1.19 billion in cash. Following the news, shares of Leap Wireless surged near 110 percent in extended trade on the Nasdaq.

AT&T will acquire Leap, the operator of Cricket wireless service, for $15 per share in cash, by which it will gain Leap's wireless properties, including licenses, network assets, retail stores and about 5 million subscribers.

The offer of $15 per share represents an 88 percent premium to the Leap's closing price of $7.98 on Friday. As of April 15, 2013, Leap had $2.8 billion of net debt.

Leap shareholders will also receive a contingent right entitling them to the net proceeds received on the sale of Leap's 700 Mhz "A Block" spectrum in Chicago, which Leap purchased for $204 million in August 2012.

The acquisition is in line with AT&T's strategy to grow and expand in the low-cost wireless market.

AT&T said it will retain the Cricket brand name, and provide Cricket customers with access to AT&T's 4G LTE mobile network. AT&T also plans to utilize Cricket's distribution channels and expand its presence to additional U.S. Cities.

AT&T intends to put Leap's unutilized spectrum - which covers 41 million people - to expand its 4G LTE deployment and improved its network.

The acquisition is subject to review by the Federal Communications Commission and the Department of Justice and to other customary closing conditions. AT&T expects to close the deal in six to nine months.

LEAP closed Friday's trading at $7.98, up $0.20 $2.50%. The stock, however, soared $8.77 or 109.90% in after-hours trade.

T closed Friday's trading at $35.81, down $0.06 or 0.17%, on the NYSE. The stock further slipped $0.01 or 0.03% in after hours trade.