Nextel Drops Bid for NextWave, Hopes to Gain Licenses at Auction
Mobile-phone company Nextel Communications has abandoned plans to mount a hostile takeover bid for NextWave Telecom, citing a court opinion that may make it easier to obtain the troubled company’s wireless licenses.
The disclosure Thursday in a filing with the Securities and Exchange Commission came just two days after Nextel revealed an $8.3-billion proposal to pay off NextWave’s creditors and acquire the company, thereby gaining control of the airwave licenses NextWave won in a 1996 auction by the Federal Communications Commission.
Nextel said it reconsidered its hostile bid on Wednesday after the U.S. 2nd Circuit Court of Appeals issued an explanation for its decision in November to reverse the rulings of two other courts in Hawthorne, N.Y.-based NextWave’s bankruptcy case.
According to a report by the investment firm Goldman Sachs, the appeals court “reaffirmed the FCC’s jurisdiction over the licenses,” suggesting that the federal agency might be allowed to repossess the licenses and auction them off again.
That means Nextel, which is growing quickly and needs more wireless spectrum to expand its network capacity, might be able to buy the licenses without the hassle of a hostile bid and potentially for less than the $8.3 billion it planned to pay.
The FCC, eager to foster competition in the wireless market, wants the NextWave spectrum put to use rather than mired in Bankruptcy Court proceedings.
Shares in Reston, Va.-based Nextel, which is controlled by cellular pioneer Craig McCaw, soared nearly 9% amid news of the court decision, rising $8.44 to close at $105 on Nasdaq.
