Sprint to Pay $3.4 Billion for Alamosa Holdings

Sprint Nextel Corp. said Monday that it would acquire Alamosa Holdings Inc., its largest Sprint-branded wireless affiliate, for $3.4 billion.

Alamosa shareholders will receive $18.75 a share, a 15% premium over the stock’s Friday close of $16.26. The deal also includes the assumption of $900 million in debt.

Alamosa shares jumped on the news, gaining $2.09, or almost 13%, to close at $18.35. Sprint Nextel shares rose 23 cents to close at $25.17. Sprint Nextel is based in Reston, Va., but its operational headquarters are in Overland Park, Kan.

News of the Alamosa deal sparked speculation about its potential effect on Sprint Nextel’s continuing fight with Nextel Partners Inc., its largest affiliate, which Sprint Nextel is scheduled to buy next year.

A Delaware Chancery Court judge last week refused to dictate how two sets of appraisers should determine how much Sprint Nextel must pay for the remaining two-thirds of Nextel Partners that it doesn’t already own. Those appraisals are due Dec. 28, followed by a third appraisal if the two prices are more than 10% apart.

Wachovia Securities analyst Jennifer Fritzsche used the Alamosa deal to set a purchase price for Nextel Partners of $35 to $39 a share, at least a 35% premium over the stock’s closing price Monday of $25.90.

Fritzsche told clients in a research note that Kirkland, Wash.-based Nextel Partners generally trades at higher values than Alamosa and that appraisers must treat the Nextel Partners acquisition as if there were competitive bidders, which were lacking in the Alamosa deal.

“As such, we believe this clause could merit an even larger premium for [Nextel Partners] shares,” she wrote.

However, Roger Entner, a telecommunications analyst for Boston-based Ovum, said the two companies were much different in terms of the type of subscribers they had and the technology they used. For that reason, he said, the Alamosa deal shouldn’t determine the Nextel Partners price.

Alamosa, based in Lubbock, Texas, sells Sprint-branded services in 19 states and has 1.48 million subscribers. It reported $1.2 billion in revenue last year.

Alamosa is the fourth affiliate that Sprint Nextel has acquired since Sprint Corp. bought Nextel Communications Inc. in August for $35 billion to form the nation’s third-largest wireless firm.