Sprint to buy Virgin Mobile USA

New York City Sprint Nextel Corp., the third-largest U.S. wireless carrier, said Tuesday that it has agreed to buy Virgin Mobile USA in a $483 million deal that will boost Sprints’ position in the fast-growing but low-end pre-paid mobile segment.

Under the deal, Virgin Mobile USA shareholders will receive shares of Sprint common stock, and cash in lieu of fractional shares. Public shareholders, who owns about 43.3% of Virgin Mobile USA, will receive $5.50 per share for each Virgin Mobile USA share held. This represents a premium of a 31% to Virgin Mobile's Monday closing share price of $4.21.

Sprint, which already owns 13% of the company, will retire all of Virgin Mobile USA's outstanding debt, which is expected to be no more than $205 million net of cash and cash equivalents on Sept. 30.

The deal is expected to close in fourth quarter 2009 or in early 2010.

Virgin Mobile USA CEO Dan Schulman will lead Sprint's prepaid business when the deal closes, reporting directly to Sprint CEO Dan Nesse.