IPCS Agrees To Settle Shareholder Lawsuit Over Sprint Deal

IPCS Inc. (IPCS) said on Wednesday that it had agreed to settle with shareholders who had sued in opposition to the company's pending takeover by Sprint Nextel Corp. (S), partly clearing the way for the deal.

IPCS shareholders believe that Sprint's offer of $24 a share is too low, based on prior deals between Sprint and its affiliates. Prior to the agreement, Schaumburg, Ill.-based iPCS was the largest independent Sprint affiliate and a thorn in the side of the nation's No. 3 wireless carrier. Taking out iPCS would remove a pesky lawsuit over exclusive rights of an affiliate to sell Sprint services in its own territory.

Terms of the settlement, as well as which shareholders were involved, weren't disclosed, but iPCS is expected to provide more details in a filing to the Securities and Exchange Commission later Wednesday.

Sprint, based in Overland Park, Kan., had seemingly cleared up the legal mess by agreeing to acquire iPCS for $426 million last month. The per-share price of $24 was a 34% premium to the prior day's closing price. Sprint also will assume $405 million in debt.

But there has been opposition to this deal. Beyond the shareholder lawsuit, Greywolf Capital Management LP said on Tuesday that the deal doesn't reflect iPCS's fair value. The hedge fund said a more suitable offer would be $34 to $47 a share.

Greywolf, which has been an investor in iPCS since 2004, said it has long expected an eventual buyout by Sprint. But it called the agreed-to price "far too low."

Its fight against the deal faces an uphill battle as the deal is being backed by private-equity giant Apollo Management LP, which hold a 8.1% stake in iPCS. Other company investors have also been seen as backing the bid, and iPCS's directors have unanimously recommended that shareholders sell their shares.

A Sprint spokesman couldn't immediately be reached for comment.

IPCS shares fell 1 cent to $23.96, while Sprint shares retreated 2.7% to $3.60.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com

(Kathy Shwiff contributed to this article.)

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