Leap Wireless to MetroPCS: No Thanks

Leap Wireless, the wireless company behind the Cricket and Jump Mobile brands, said Sunday that it will reject an unsolicited acquisition offer from competitor MetroPCS.

MetroPCS is a regional carrier which has operations in the metropolitan areas of central and northern California, central and South Florida, Georgia, Michigan, and Texas. It plans to launch service in Los Angeles this week, and in New York, Philadelphia and Boston in 2008 and 2009.

Leap, on the other hand, operates in about 23 states, and has licenses to operate in 35 of the top 50 markets. Together, the two companies have had about 6.2 million subscriber, and a presence or license to operate in nearly all of the country's 200 wireless markets.

Both companies center their wireless business around allowing consumers to make unlimited calls at a single rate when within their coverage area, and no-contract plans. As is to be expected, the customer turnover for these companies is considerably higher, sometimes at two to three times the industry average.

In a public letter to MetroPCS CEO Roger Linquist, Leap CEO and president S. Douglas Hutcheson said the company's offer failed to take in Leap's "robust growth prospects," and that it undervalued Leap in comparison to MetroPCS and benefitted his company's shareholders more than it did Leap's.

Hutcheson seemed to suggest that MetroPCS' sudden and unexpected public announcement of its intent to acquire Leap was an acknowledgment that the company may soon become more valuable, and thus Linquist was attempting to grab the company at a discounted price.

"Leap is well-positioned to take advantage of strong organic growth and strategic opportunities and your proposal would unfairly dilute the ability of our shareholders to recognize these benefits," he wrote.

In response to Hutcheson's public letter, Linquist shot back that Leap's own shareholders had expressed interest in a quick merger of the two companies. "It appears that Leap's Board is ignoring the will of its shareholder base," he added.

He also said that discussions had indeed happened between Leap and MetroPCS which went nowhere due to Leap's "highly unrealistic valuation expectations."

MetroPCS said it will "review all it's options at this time," but gave no indication if it intended to resubmit another offer to Leap.