Speculation about the possibility of a private equity bid is driving up shares
of Sprint Nextel Corp., UBS Investment Research analyst John Hodulik wrote in a
Wednesday research note. Shares of the company rose 43 cents, or 2%, to $21.89
in late Wednesday trading. Wireless peer Alltel Corp. announced a $27.5 billion
leveraged buyout with TPG and Goldman Sachs Capital Partners late Sunday. Sprint
Nextel gained more than $2 per share since its close Friday, before the news
about the Alltel LBO. Because the Reston, Va.-based Sprint Nextel has a
market cap of more than $63 billion and about $20 million in net debt, its size
alone would make an LBO problematic. With AT&T Inc.'s introduction of Apple
Inc.'s iPhone and increased competition in the wireless market, Hodulik predicts
that Sprint Nextel will have to spend more money to grow. "While we continue to
believe it is unlikely that a deal for Sprint Nextel will materialize in the
near term," the analyst wrote, "we expect ongoing speculation to provide support
to the stock." —Chris Nolter
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May 21 story from The Deal.com
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