L-1 Identity Solutions Inc. |ID
Safran SA

Deal value $1.1 billion

Spread 03/22/11 16 cents, or 1.4%

The U.S. government extended its review of the $1 billion acquisition of L-1 Identity Solutions Inc. by Safran SA of France a second time under national security law.

The Committee on Foreign Investment in the United States, which conducts an interdepartmental executive branch review of purchases of U.S. assets by foreign entities for national security purposes, has an initial 30-day waiting period followed by a potential 45-day extended review and a 15-day period for the White House to sign off on any proposed arrangement to clear a deal.

L-1 and Safran have already withdrawn and refiled their notice once, but CFIUS, which is chaired by the Treasury Department, kicked off a second 45-day investigation. L-1 says the companies continue to negotiate a mitigation agreement with CFIUS, and the extended review is now set to expire April 29, although it could end earlier if the parties enter an acceptable mitigation agreement.

Safran in 2009 purchased a majority stake in General Electric Co.'s homeland protection business and Motorola Solutions Inc.'s biometric business, Printrak, so it has recently been through the CFIUS process. The current review is running a process similar to the previous deals.

Safran pays a $75 million fee if it cannot secure government approval.

L-1 provides identity security services, including biometrics, such as fingerprint and iris identification, and credential production services. About 90% of L-1's business is government-related, and its credentials business includes contracts for driver's license and U.S. passport production. CFIUS is looking at how sensitive information in existing contracts will be protected, a source says.

Leap Wireless International Inc. |LEAP
MetroPCS Communications Inc. |PCS

Previous offer value $3.4 billion

Current market capitalization $1.1 billion

Pentwater Capital Management LP intends to present a dissident slate of directors to the board of Leap Wireless International Inc. The move has revived speculation that MetroPCS Communications Inc. might renew a takeover bid for its wireless counterpart.

The proposed $39 billion acquisition of Deutsche Telekom AG's T-Mobile USA Inc. by AT&T Inc. could add fuel to this speculation. Both Leap and MetroPCS offer unlimited wireless minutes for a fixed monthly fee without long-term contracts, and the combination would create a stronger national competitor to larger wireless operators.

Pentwater, with under 5% of Leap, sent a letter to the board declaring its intention to nominate three directors at the next annual meeting. Leap has an eight-member, unstaggered board and held its last annual meeting May 20. Pentwater says Leap has made missteps recently, including the rejection of a 2007 MetroPCS offer. In September 2007, MetroPCS offered to acquire Leap in a stock exchange at 2.75 of a MetroPCS share for each share of Leap. Leap said the bid did not reflect the company's growth prospects.

On March 7, at a Credit Suisse Group telecom conference, MetroPCS CEO Roger Linquist, in response to a question about consolidation in the sector, said, "Really there is only one logical [target] that people talk about, and that's [Leap] -- that has always been an opportunity." But MetroPCS' interest in Leap could be challenged by opportunities that might arise from divestitures related to the AT&T-T-Mobile combination.

Leap has a poison pill with a 5% trigger, which prevents Pentwater from increasing its stake.