Leap Wireless (Cricket) and Pocket Communications are teaming up to from a Leap-controlled and managed joint venture that will provide “enhanced mobile communications” through Cricket brand to customers in the South Texas region, from San Antonio to Laredo and in the Rio Grande Valley, covering more than 4.4 million people.
Leap has about 5 million customers, 400,000 of them from South Texas. Pocket Communications, which offers similar pre-paid service, had about 320,000 customers in the region at the end of 2009.
At the closing, Leap will end up with approximately 76% of the joint venture, leaving the rest (24%) to Pocket Communications. As one step in the transaction, immediately prior to the closing, Leap will purchase some of Pocket Communications’ South Texas assets for approximately $38 million in cash, and contribute them to the joint venture together with its own South Texas assets. Pocket will contribute the remainder of its South Texas assets to the joint venture directly. In addition, “Pocket will be obligated to sell its interest in the joint venture to Cricket in the event of a Leap change of control.”
Check out that last sentence again. Sounds like Leap is increasing its valuation prior to merging or being bought by someone else. We did report they have hired an investment bank and so did MetroPCS, which wants to buy Leap. We’ll keep watching…