Sprint to acquire US Unwired

Sprint today surmounted an obstacle to its merger with Nextel Communications, announcing it would purchase the Louisiana wireless affiliate seeking to block the $36 billion deal.

Sprint announced it would purchase US Unwired for $1.3 billion and assume the carrier’s $266 million debt. In exchange, US Unwired is dropping its court actions against Sprint to stop the Nextel-Sprint merger and settle a billing dispute between the carriers. Based in Lake Charles, La., US Unwired operates affiliate networks in 48 markets in the South using Sprint name. The networks serve about 500,000 Sprint customers and covers 1.8 million pops where Sprint has no infrastructure of its own. But the Nextel acquisition, expected to close this year, would give Sprint iDEN infrastructure in many of its affiliate markets, creating a situation where Sprint would be essentially competing against its own brand.

Sprint has been in talks with its affiliates since announcing the Nextel deal, which could lead to Sprint breaking or altering its affiliate deals with as many as nine carriers. US Unwired was the only carrier to seek a court injunction against the Sprint-Nextel deal, but the acquisition deal brokered by the companies could lead other affiliates to try their luck in court.

“This acquisition would bring an end to a long partnership with the management and shareholders of US Unwired,” Sprint CEO and chairman Gary Forsee said in a statement. “We appreciate their efforts over the years to grow the Sprint business in its assigned territories. While we decided to acquire direct ownership in these assets, we continue to value our relationship with other affiliates providing Sprint services.”

Sprint gave no indication of what it would do with US Unwired PCS assets after the Nextel acquisition is complete. Presumably, since both Nextel and Sprint use separate cellular technologies, Sprint would continue to operate the US Unwired networks for its CDMA customers and the Nextel’s infrastructure for iDEN customers. The combined company, however, is expected to eventually migrate to a melded CDMA architecture.

Sprint has agreed to buy all of US Unwired’s outstanding stock at $6.25 per share. Shareholders with about 27.3% of the outstanding stock have all agreed to the offer and have committed to vote their shares in favor of the acquisition, which Sprint expects to close in the third quarter.