Nextel Communications Inc., which is in the process of being acquired by Sprint Corp., reported in a government filing that the appraisal process associated with affiliate Nextel Partners Inc.’s put option that will be triggered following the acquisition could take at least four months after Nextel Partners’ shareholders vote to exercise the option.
Sprint and Nextel have said that they expect the acquisition to be approved during the third quarter of this year. Nextel Partners’ affiliate agreement provides it with an 18-month window following a change of control at Nextel to exercise its put option, which would require Nextel to acquire Nextel Partners at fair market value plus a put premium. Nextel Partners’ management has already made a government filing stating its support for exercising the put option following Nextel’s acquisition by Sprint.
In the Securities and Exchange Commission filing, Nextel said that once the initial appraisal is complete, Nextel and Nextel Partners shareholders will have the right to challenge the appraisal, which Nextel said “could result in an additional undeterminable period of time before the put price is finally determined.”
According to Nextel Partners’ put rights, the valuation is to be determined by two appraisers-one chosen by Nextel and the other by Nextel Partners. If the valuation of the two appraisers vary by more than 10 percent, a third appraiser would be selected to establish the valuation.
Once a fair market value is reached by the appraisers, Nextel Partners or Nextel shareholders have the right to challenge the valuation. A challenge by a Nextel Partners shareholder would set a ceiling of between $16.97 and $18.79 per share, while a challenge from a Nextel shareholder would set a floor of between $6.81 and $7.99 per share.
Nextel Partners’ stock was trading at $25.50 per share Thursday, down from its 52-week high of $26.81 set June 24. The $25.50 per share stock price equates to $6.83 billion in total market capitalization.
Analysts have predicted that Sprint’s acquisition of Nextel also will require Sprint to roll up its own network affiliates, which have clauses in their affiliate agreements preventing Sprint from offering competing services in the affiliate markets.
