updated 6/24/2005 4:40:37 PM ET 2005-06-24T20:40:37

Affiliates on both sides of the potential $35 billion merger of Sprint Corp. and Nextel Communications Inc. are causing their parent companies headaches.

Nextel Partners Inc., which sells Nextel-branded services in 31 states, said Thursday a special committee of the company's board recommended shareholders vote in favor of exercising a "put right" which would force Sprint-Nextel to buy the company after the merger.

Another affiliate, U.S. Unwired Inc. of Lake Charles, La., has asked a federal judge to halt the merger, saying it will violate the company's contract with Sprint to exclusive sales rights in parts of the South.

Sprint and Nextel officials declined to comment on the Nextel Partners issue and said they will "vigorously" defend against the U.S. Unwired suit.

The role of the affiliates under a merged Sprint-Nextel has been a big question mark since the deal was announced in December. Officials have said they would deal with the matter after the merger is completed later this year.

But the affiliates are pushing the issue.

Nextel Partners, based in Kirkland, Wash., filed paperwork with the Securities and Exchange Commission providing for a special shareholder meeting to vote on the put right. The company's chairman, chief executive and president, John Chapple, said in a memo that voting for the put right "is the right decision given all the factors involved."

Partners spokeswoman Susan Johnston said it was too early to speculate how much the company would be worth, but shares not owned by Nextel currently are valued at $4.8 billion.

The stock of Nextel Partners broke through its 52-week high on Thursday and rose another 33 cents, or 1.3 percent, to $26.50 in Friday afternoon trading on the Nasdaq Stock Exchange.

In Louisiana, U.S. Unwired, which sells Sprint-branded services in six southern states, filed for an injunction this week in the U.S. District Court of Western Louisiana to stop the merger.

U.S. Unwired and Overland Park, Kan.-based Sprint already are in court over the affiliate's claims that Sprint is trying to drive it out of business.

The latest lawsuit claims the merger would allow Sprint to take over Nextel affiliates that now compete with U.S. Unwired in nine of its 11 territories. That, U.S. Unwired claims, violates its contract with Sprint guaranteeing it exclusive rights to sell Sprint services in its regions.

Sprint and Nextel shareholders are scheduled to vote on the proposed merger on July 13. U.S. Unwired wants a judge to delay the consummation of the merger until the deal is rewritten to exclude Nextel affiliates that compete with U.S. Unwired.

Meanwhile Thursday, Sprint and Nextel said Sprint will remain the lead brand name if the companies successfully merge later this year.

Nextel, which enjoys intense loyalty among its business customers, will remain a "key product brand," the companies said.

Nextel's yellow-and-black color scheme will take over the unified brand's logo, which will feature the Sprint name and a stylizing dropping pin _ a nod toward Sprint's 1990s-era advertising campaign that emphasized the company's network's call clarity.

Officials said the choice of Sprint as the lead name followed discussions with research firms, employees and customers which determined that Sprint had more widespread recognition.

Telecommunication experts said the move made sense as Nextel is considered more of a favorite for businesses wedded to its press-to-talk reliability. Sprint, on the other hand, is trying to attract more customers interested in wireless Internet and download services.

"Sprint is definitely one of the companies father down the path of getting customers into data and mobile entertainment," said Jupiter Research analyst Julie Ask. "Nextel just had more of a niche market than Sprint does. It's a question of broader appeal."

Officials for the two companies haven't said how the merger will affect their separate networks of retail stores and mall kiosks and didn't say Wednesday how much the switch could ultimately cost.

© 2013 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 2.79%
$30K home equity loan FICO 5.78%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.57%
13.57%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com