updated 9/4/2007 9:30:43 AM ET 2007-09-04T13:30:43

Discount wireless phone service provider MetroPCS Communications Inc. on Tuesday offered to buy rival Leap Wireless International Inc. in a stock deal valued at about $5.12 billion.

MetroPCS, which offers prepaid phone plans, said it would also assume or refinance $2 billion of Leap debt as part of the transaction.

The company offered to pay 2.75 shares of its stock for each share of Leap. Based on the $27.29 closing price of MetroPCS shares on Friday, 2.75 shares would be worth about $75.05. That represents a premium of 3 percent to Leap's closing price of $72.50 on Friday. With about 68.2 million Leap shares outstanding at Aug. 3, the MetroPCS offer would be worth about $5.12 billion.

Based on the average weighted price of MetroPCS shares over the previous 20 days, the deal values Leap at $5.5 billion, the company said.

"The combined company will create a new national wireless carrier with licenses covering nearly all of the top 200 markets in the United States," MetroPCS Chairman and Chief Executive Roger Linquist said in a statement.

Under terms of the deal, MetroPCS would own about 65.4 percent of the combined company, it said. The company also forecasts cost savings of about $2.5 billion.

The MetroPCS proposal is subject to due diligence, approval by MetroPCS' and Leap's respective boards and shareholders, as well as customary regulatory approvals.

Bear, Stearns & Co. is acting as financial adviser to MetroPCS, and Baker Botts LLP, Skadden, Arps, Slate, Meagher & Flom LLP and Paul, Hastings, Janofsky & Walker LLP are acting as legal counsel.

Shares of MetroPCS fell 29 cents to $27 in premarket trading, while shares of Leap jumped $9, or more than 12 percent, to $81.50.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.73%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.14%
17.14%
Source: Bankrate.com