On August 24, 2009, the Federal Trade Commission (“FTC”) announced its approval of the acquisition by Sprint Nextel Corporation (“Sprint”) of wireless reseller Virgin Mobile USA Inc. (“Virgin Mobile”).
The acquisition, which still requires FCC and SEC approvals, is intended to strengthen Sprint’s position in the prepaid wireless calling market. Virgin Mobile began as a joint venture between Sprint and Virgin Group Ltd., and became a public company in 2007.
Besides the need for further regulatory approvals, the deal faces opposition from three subsidiaries that have sued Sprint for competing against them in alleged violation of exclusive territory agreements contained in Sprint’s contracts with those companies. The three subsidiaries—iPCS Wireless, Horizon Personal Communications, and Bright Personal Communications Services—all seek an injunction from an Illinois state court against consummation of the pending transaction. The subsidiaries had filed previous suits against Sprint’s acquisitions of Nextel and Clearwire, and obtained a judgment against Sprint in the Nextel case. The Clearwire litigation is pending.