Sprint Nextel Corp. is holding off on a counter bid for MetroPCS Communications Inc. to gain time to scrutinize the carrier’s planned combination with T-Mobile USA Inc., said people familiar with the situation.
MetroPCS stock dropped 47 cents a share, closing at $12.04. Sprint shares rose 9 cents, to $5.04.
Sprint’s board met last week after Deutsche Telekom AG disclosed a proposal to combine its T-Mobile unit with MetroPCS, said one of the people, who asked not to be named because the process is private. Sprint wants to see a filing from Deutsche Telekom on the deal’s structure, the people said, which companies typically release one to two months after disclosing deals, before making an offer.
Representatives for Sprint and MetroPCS declined to comment.
Sprint may have as much as three months to bid before MetroPCS investors vote on the T-Mobile deal. The added heft of MetroPCS may help the third-largest U.S. wireless carrier compete more effectively with market leaders Verizon Wireless and AT&T Inc. Chief Executive Officer Dan Hesse said last month that Sprint’s scale puts it at a disadvantage.
“By waiting, Sprint has been able to remind MetroPCS investors where their stock is headed without a Sprint counterbid,” said Walt Piecyk, an analyst with BTIG LLC in New York. “This could be very useful in future negotiations.”
Unconfirmed reports in February had said Sprint CEO Dan Hesse struck a deal to acquire MetroPCS using Sprint shares in part to buy it. Those reports had said Sprint’s board rejected the plan because it would have forced the company to give MetroPCS owners too many Sprint shares.