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AT&T Cuts Deal To Buy Leap Wireless

Leap shares leapt over 116% after-hours, suggesting that Wall Street thinks AT&T won't get Leap without sweetening the offer

AT&T late Friday said it had agreed to buy the pre-paid cellphone carrier Leap Wireless International whose widgets are sold under the Cricket brand.

It’s supposed to pay $15 a share or roughly $1.19 billion, an 88% premium compared to Leap’s closing price of $7.98. However, Leap’s $2.8 billion debt puts the real price closer to $4 billion.

AT&T, the No 2 wireless provider in America, is supposed to get Leap’s unused and highly valuable spectrum, a piece of property that could service tens of millions of people.

Cricket, whose users shun long-term contracts, has five million subscribers who pay month-to-month.

AT&T is following T-Mobile into the pre-paid space. T-Mobile acquired MetroPCS in May, intending to shut down its network in a couple of years so it can redeploy its airwaves.

AT&T said it will keep the Cricket brand and offer Cricket customers a wider ranger of devices and access to its high-speed 4G LTE network.

It will push Cricket in the US, where it reckons the pre-paid market, the fastest growing part of the market, is relatively untapped.

Leap shares literally leapt over 116% after-hours to $17.28 a share suggesting that Wall Street doesn’t think AT&T will get Leap without sweetening the offer or another party horning in.

Otherwise, the deal, which is likely to get close regulatory scrutiny, is expected to close in six-nine months.

US regulators blocked AT&T’s attempt to buy T-Mobile US for $39 billion a couple of years ago.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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