Dallas-Based MetroPCS Pulls Bid for Leap Wireless

Nov 01, 07:08 PM

Current Headlines: By Andrew D. Smith, The Dallas Morning News

Nov. 1--Less than two months after making an all-stock bid to buy Leap Wireless International and forge a fifth national cellular carrier, Dallas-based MetroPCS Communications has withdrawn the offer.

Technically, San Diego-based Leap rejected the MetroPCS offer just days after receiving it, but many analysts and investors thought the merger made so much sense that the two companies would probably work out a deal. Thursday's announcement seems to have dashed those hopes.

Shares of both companies plunged on the early afternoon announcement. MetroPCS stock fell $2.45 to $20.05 in afternoon trading. Leap stock fell more than $4 to $67.19.

An announcement from MetroPCS said that Leap had been unwilling to negotiate.

"While there is widespread investor and analyst enthusiasm for a merger between the two companies, MetroPCS has not been able to engage Leap in meaningful negotiations regarding the MetroPCS merger proposal," the statement said.

Investors had been very enthusiastic about the merger because the two companies sell much the same product -- unlimited voice and data with no monthly contracts -- in very different markets.

Leap began selling service under its Cricket brand in 1999. The company has since expanded into nearly 40 markets, including 35 of the nation's top 50.

Major service clusters exist in Tennessee, North Carolina, southeast Texas, the Ohio River Valley and central California. Leap is also moving into larger markets such as Chicago.

MetroPCS is a younger company -- it signed up its first customers in 2002 -- and it operates in far fewer markets. Those markets tend to be very large ones, however. It recently launched service in the nation's second-largest city, Los Angeles, and is planning to expand into New York soon.

Perpetual network construction and growing penetration into existing markets have helped both companies. MetroPCS signed up more than 600,000 people in the first six months of the year, while Leap added about 390,000.

MetroPCS employs about 400 people at its headquarters in Dallas.

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