Sprint settles Virgin lawsuits

8 Oct 2009

US mobile operator Sprint Nextel has announced it has agreed a memorandum of understanding which will settle a series of lawsuits challenging its USD483 million acquisition of Virgin Mobile USA, the Associated Press reports. In a regulatory filing, the Kansas-based company said it was releasing additional details with Virgin about the structure of the merger and the negotiations that led to the deal. In return the plaintiffs in five cases filed in New Jersey state court and two cases filed in federal court have agreed to withdraw their lawsuits once a judge approves the settlement and the acquisition is completed. The plaintiffs in the cases had opposed the merger, saying the terms were not in the best financial interest of Virgin Mobile shareholders.

As reported by CommsUpdate, Sprint agreed to purchase the mobile virtual network operator (MVNO) and pre-paid specialist in July this year, and the following month the deal received antitrust approval but has since met legal opposition from Virgin shareholders and Sprint affiliate iPCS. Three subsidiaries of the Illinois-based firm, which resells Sprint services, filed a case claiming the acquisition would violate an agreement by Sprint not to compete against iPCS within its territories. Sprint has described the case as being ‘without merit’ but the strategy previously worked for iPCS when an Illinois judge agreed that Sprint’s 2005 purchase of Nextel violated the exclusivity agreement and ordered Sprint to divest its Nextel-branded operations in iPCS markets. Despite this, Sprint expects the merger to go ahead as planned, although the deal still requires approval from Virgin shareholders, as well as federal and state regulators.