Despite protests from companies like Alamosa, Sprint Corp. confirmed on Tuesday that it will go ahead with its acquisition plan of Nextel Communications Inc. and the deal is all set to be completed by Friday. From next week, a unified stock is likely to trade at the bourses of the merged companies.
Overland Park-based Sprint and Reston based Nextel’s merger would make them the third-largest wireless service provider in the country and are expected to pose a serious challenge to the market leaders Cingular Wireless and Verizon Wireless. Last week, the Federal Communications Commission and the Justice Department had given the green signal to the merger saying that there is still adequate competition to keep the company from dominating its segment. Shareholders of both companies have already given the nod to the deal.
After the final confirmation of the merger, shares of both companies marginally shot up at the bourses. Around mid-day trading session on Tuesday, Sprint was trading at $26.28, up by 24 cents at New York Stock Exchange (NYSE) and shares of Nextel went up by 32 cents at $34.10 on the NASDAQ Stock Market. After the formal merger, the share of Sprint Nextel Corp. will trade under the stock symbol “S” on the New York Stock Exchange.
However, acquisition of Nextel would not mean the end of troubles for Sprint in the immediate future. Many of its existing affiliates are peeved with this merger on the ground that by doing so Sprint is violating agreements it made in the 1990s not to compete with its affiliates in their territories. While it has reached to an agreement with two of its affiliates, its negotiation with other three Alamosa, Enterprise and Gulf Coast has not yielded any results so far. A wholly owned subsidiary of Alamosa has even filed a law-suit against this merger.