MetroPCS withdraws Leap merger bid

MetroPCS today said it is rescinding its offer to merge with Leap Wireless to after failing to bring Leap to the negotiating table. Though now dead, the deal could be revived in the future by either company, both of which have cited the advantages of combining.

“While there is widespread investor and analyst enthusiasm for a merger between the two companies, MetroPCS has not been able to engage Leap in meaningful negotiations regarding MetroPCS’ merger proposal,” MetroPCS officials said in a statement.

Metro publicized a letter it sent to the Leap board in September, proposing a $5.5 billion deal that would create what Metro termed the fifth nationwide operator. The proposal favored Metro, however, putting the majority of the new company’s shares in the hands of Metro stockholders. Leap rejected the deal two weeks later, saying Metro far under-valued the company. Leap didn’t just turn Metro down, however. It took a few jabs at its peer, pointing out difficulties Metro had in launching new markets, particularly Los Angeles.

What resulted was a round of sparring played out in statements from the two companies. Analysts predicted the companies were merely trying to gain leverage over one another during negotiations. But those negotiations went nowhere.

Leap and Metro both back an all-you-can-eat local calling model that differentiates them from the minute-buckets plans of the Tier 1 operators. The similarities in business models would not have been the only advantage in a merger. The two operators’ footprints don’t overlap, for the most part, and both had complimentary plans to expand into larger markets in the Midwest and East Coast.