Leap Wireless International, Inc. (LEAP), AT&T Inc. (T): How Will This Acquisition Saga End?

DISH Network Corp (NASDAQ:DISH) lost its battle, and many believe the company would chase Leap. However, DISH Network Corp (NASDAQ:DISH) already has a large spectrum, one that is undeveloped and is ready for use in a wireless network. Therefore, DISH Network Corp (NASDAQ:DISH)’s primary goal was to acquire Sprint Nextel Corporation (NYSE:S), and when it failed, it backed out of the Clearwire Corporation (NASDAQ:CLWR) race altogether.

DISH may show some interest in Leap due to its mobile business. However, DISH wants subscribers, not a business with a lot of debt and a large spectrum. Sprint Nextel Corporation (NYSE:S) was attractive because it came with 55 million subscribers. Leap has only 5.3 million subscribers. Therefore, I view DISH Network Corp (NASDAQ:DISH)’s level of interest as minimal, and would not bet on the company going head-to-head with AT&T Inc. (NYSE:T).

DISH Network Corp (NASDAQ:DISH) simply doesn’t have deep enough pockets to compete with AT&T Inc. (NYSE:T); thus, I don’t expect them to try; I would view it as a bad sign that DISH has not yet expressed interest in Leap if you are a Leap shareholder.

What does this mean?

Verizon Communications Inc. (NYSE:VZ) and DISH were the only other two companies that I thought may attempt to acquire Leap, but now, I view it as unlikely.

For Leap shareholders, this could be bad. AT&T’s opening bid was near $15; Leap is currently trading at around $17.29. Therefore, the stock could trade lower if no other buyers come to the table.

For AT&T, this could be a good development. AT&T needs Leap’s spectrum to free space in the flow of data, and Leap’s unused spectrum gives AT&T growth potential.

Of course, Leap shareholders could reject the initial offer, but with $580 million in short-term liabilities and total debt in excess of $3.3 billion, AT&T’s offer might be a little too good to pass up. Therefore, if I were holding at Leap’s current premium, I’d consider selling, and possibly moving to an investment in AT&T, which is the company that has the most to gain.

Brian Nichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How Will This Acquisition Saga End? originally appeared on Fool.com is written by Brian Nichols.

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