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Old 09-03-2009, 07:54 AM   Nav to Top  #1
Saintjames
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Default Leap Wireless International, Inc.

LEAP - Leap Wireless International, Inc. - Google Finance

This was mentioned only in passing on CNBC yesterday and is definitely a RUMOR and NOT fact. I think it deserves a thread here as not only is it an interesting company (with financial issues), but the rumors of a buyout bid by AT&T, MetroPCS, or another carrier could very well be true. Especially at this stage in the game for LEAP. Having said that, keep in mind in the past LEAP has rejected takeover bids.

The market reacted strongly to this rumor yesterday morning...



Reported yesterday on StreetInsider: StreetInsider.com - Leap Wireless (LEAP) Higher On Takeover Talk

Shares of Leap Wireless International (Nasdaq: LEAP) are higher today on rumors it could be the target of a takeover bid. Shares are up 6% on heavier-than-normal volume.

MetroPCS Communications (NYSE: PCS), which scrapped its bid for LEAP in 2007, could make another run at the company according to some.

Back in 2007, MetroPCS offered to acquire the company in a stock deal that was at that time worth $78 per LEAP share. LEAP rejected the offer and PCS later withdrew their bid.

Based offer the past offer of 2.75 shares of PCS for each LEAP share, the deal could be worth $21.67 per LEAP shares based on PCS current market price of $7.88. LEAP currently trades at $17.45.

Reported yesterday on seekingalpha: Rumors Swirl on AT&T Takeover of Leap Wireless -- Seeking Alpha

This was hitting around 1PM [Wednesday] and the stock and premiums are through the roof. My initial gut is it would be very difficult to get that past the current regulators at FCC and DOJ (at least a purchase by AT&T). Gonna do some digging though. Just highly skeptical that it's true. If there is an offer I would bet it's not AT&T.

Why? A competitiveness investigation was just launched against AT&T so they decide to do merger? Even a small one?

In my view, it's an invite for the FCC to open up a can of "whoop ass".

If one wanted to speculate against such a merger one could sell a vertical call spread as premiums have gone through the roof. Time to start asking around...lots of mergers going on right now. Anything is possible though so one should cap risk.
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