Sprint to Purchase Virgin Mobile USA

Sprint Nextel Corporation and Virgin Mobile USA, Inc. have announced today that they reached an agreement for Sprint to acquire Virgin Mobile USA for around $483 million. At the same time, the deal between the two also includes the fact that “Sprint will retire all of Virgin Mobile USA’s outstanding debt,” estimated at $248 million net of cash and cash equivalents on March 31, 2009.

The purchase is expected to enable Sprint to strengthen its position in the prepaid segment by unifying the Virgin Mobile brand and its Boost Mobile business. According to the wireless carrier, the two brands are complementing each other, as they come with different offerings, style and target segments. Moreover, the prepaid businesses will continue to exist after the closing of the transaction, the carrier added.

As soon as the deal is closed, Sprint’s prepaid business will have Dan Schulman at the helms, who currently serves as Virgin Mobile USA's chief executive officer. He will report directly to Dan Hesse, Sprint Nextel’s president and CEO. Schulman will take care of the company's prepaid business strategy and growth. Boost Mobile will be led by Matt Carter, who will report to Schulman.

“The acquisition of Virgin Mobile USA positions Sprint for even greater success in the prepaid wireless segment. Prepaid is growing at an unprecedented rate with consumers keenly focused on value. Virgin Mobile is an iconic brand in the marketplace that will complement our Boost Mobile brand,” Dan Hesse stated. “Sprint is committed to growing its prepaid business and this transaction will provide us with the resources and opportunities to compete more aggressively, and strengthen our position in prepaid,” Schulman commented.

The duo also announced that the transaction was subject to various closing conditions, and that Virgin Mobile USA’s stockholders still had to approve it. Other customary closing conditions would also apply. The two companies also added that the deal should be closed in the fourth quarter of the ongoing year or at the beginning of 2010.