Sprint and Nextel Communications, Inc. have announced that their boards of directors have unanimously approved a definitive agreement for a merger of equals. The combination is intended to create a wireless carrier augmented by a global IP network that will offer consumer, business, and government customers new broadband wireless and integrated communications services. The new company, which will be called Sprint Nextel, also intends to spin off to its shareholders Sprint's local telecommunications business following the merger.
Sprint and Nextel are being valued equally in the merger and their shareholders will each own approximately 50% of the new company after the merger. Existing Sprint shares will remain outstanding and each Nextel common share will be converted into new company shares and a small per share amount of cash, with a total value equal to 1.3 shares of Sprint Nextel common stock. The exact stock/cash allocation will be determined at closing of the merger in order to facilitate the spin-off of the local telecommunications business on a tax-free basis. The aggregate amount of the cash payment will not exceed $2.8 billion.
The newly combined company has announced its leadership team: Gary D. Forsee, currently chairman and CEO of Sprint, will become president and CEO of Sprint Nextel. Timothy M. Donahue, currently president and CEO of Nextel, will become chairman of the new company. Len Lauer, currently president and COO of Sprint, will serve as COO of the new company, and Paul Saleh, currently Nextel's EVP and CFO, will serve as CFO of Sprint Nextel. Tom Kelly, EVP and COO at Nextel, will become the new company's chief strategy officer. Barry J. West, Nextel's EVP and CTO, will serve as its CTO. Leading the transition teams and serving as co-chief transition officers will be Steve Nielsen, SVP - finance at Sprint, and Richard Orchard, Nextel's SVP and chief service officer. The Sprint Nextel Board will consist of 12 directors, six from each company, including two co-lead independent directors, one from Sprint and one from Nextel.
Sprint Nextel will have its executive headquarters in Reston, VA, and its operational headquarters in Overland Park, Kan. The new company's common stock will be listed on the New York Stock Exchange. The merger is expected to close in the second half of 2005 and is subject to shareholder and regulatory approvals, as well as other customary closing conditions. Following the close of the merger, Sprint Nextel intends to separate Sprint's local telecommunications business, including consumer, business, and wholesale operations from its other businesses and then spin this separated company off to the Sprint Nextel shareholders in a transaction that is expected to be tax free. The inclusion of Sprint's North Supply business in the spin-off will be determined at a later date.