Leap Wireless Springs 115% Higher, Blows Past AT&T Buyout Price

By Matt Egan Industries FOXBusiness

Shares of Leap Wireless (LEAP) raced 115% higher Monday morning after AT&T (T) unleashed a $1.2 billion buyout of the prepaid mobile service provider that featured a hefty premium.

Continue Reading Below

In an attempt to gobble up coveted spectrum and compete better against discount wireless providers like T-Mobile US (TMUS), AT&T offered to acquire Leap Friday evening for $15 a share in cash.

That price tag represents a whopping 88% premium on Leap’s last closing price of $7.98 and a level unseen since July 2011.

Interestingly, Leap’s shares blew past that $15 bid price on Monday, surging as high as $17.25, indicating Wall Street believes the AT&T offer could be sweetened or topped. Shares of San Diego-based Leap were recently up 114.29% to $17.10.

AT&T, the No. 2 U.S. carrier, said it believes the result of the buyout “will be increased competition, better device choices, improved customer care and a significantly enhanced mobile Internet experience for consumers seeking low-cost prepaid wireless plans.”

The deal is subject to review by the Federal Communications Commission and the Department of Justice, which blocked AT&T’s proposed takeover of T-Mobile for $39 billion in 2011.

Continue Reading Below

The Leap takeover announcement also drove buying in shares of other spectrum holders, including NTELOS Holdings (NTLS), U.S. Cellular (USM) and U.S. Cellular parent Telephone & Data Systems (TDS).

For its part, Dallas-based AT&T dropped 0.71% to $35.56 Monday morning. 

What do you think?

Click the button below to comment on this article.