Some Leap Wireless International Inc. (LEAP) shareholders appear to be getting nervous about a fellow investor’s attempt to purchase a growing interest in the regional wireless operator.
In an open letter to Leap’s board of directors, Pentwater Capital Management said it was concerned that MHR Fund Management L.L.C. had recently increased its ownership stake in Leap from 20% to 27.5% on the open market. MHR is headed by March Rachesky, who also serves as the chairman of the board at Leap.
Pentwater said the move looked to be an attempt to gain control of the company without having to pay a takeover premium. Looking to stave off this potential, Pentwater has asked Leap’s board to establish a shareholder rights plan “to prevent MHR Capital from taking control of Leap without paying an acquisition premium.”
“Accordingly, Pentwater again suggests that the only reasonable course of action for Leap’s board of directors to take is to immediately adopt a stockholder rights plan that would prevent any party from acquiring more than 27.5% of Leap’s voting equity without the approval of the board,” Pentwater noted in the letter.
The move looks to be a bit late as reports this morning indicated that MHR has since increased its ownership stake in Leap to 29.97%. MHR has been involved in Leap since the carrier emerged from bankruptcy protection in 2004.
Leap has a history of butting heads with Pentwater, which earlier this year sent a letter to Leap’s board asking that it nominate three directors for election to the board.
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