A month ago Virgin Mobile USA said that it will acquire Helio for $39 million. The Richard Branson-Sprint’s MVNO has announced that it’s a done deal. Under the terms of the agreement, Helio shareholders (SK Telecom and EarthLink) got 13 million shares of Virgin Mobile USA Class A common stock, or about $38 million based on the average closing price. Additionally, SK Telecom and Virgin Group will each invest $25 million in Virgin Mobile USA for preferred shares.
According to Virgin Mobile USA’s CEO, Dan Schulman, with the acquisition of Helio the company gets:
- a set of unique and differentiated data applications;
- entry into the postpaid market, with a sophisticated billing and customer care platform;
- approximately 170,000 Helio customers;
- revised terms for the Sprint PCS Services Agreement, expected to result in an 8% reduction in the Company’s effective cost per minute in 2009;
- reduction in net debt of approximately $35 – $40 million, through the investments of $25 million each by SK Telecom and Virgin Group in the form of preferred mandatory convertible stock at the price of $8.50 per share;
- an increase to Virgin Mobile USA’s total revolver from $75 million to $135 million, through additional commitments of $25 million by Virgin Group and $35 million by SK Telecom; and
- the addition of SK Telecom as a strategic shareholder with two seats on the Company’s Board of Directors.
We wish all the best to the bigger company and look forward to see Virgin Mobile USA introducing new products and services in the future.