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Sprint Pays $1.3B For US Unwired

UPDATED: Sprint will pay $1.3 billion in cash for wireless reseller U.S. Unwired , a move that erases a legal challenge to Sprint's pending merger with Nextel .

This morning's announcement comes just four days before attorneys for Sprint and US Unwired were scheduled to appear in a federal court in Louisiana.

Last month, US Unwired filed for an injunction to block the deal, which it claimed would violate a non-compete agreement in its 1998 contract with Sprint. Nextel sells in US Unwired footprint in Alabama, Mississippi, Tennessee and Texas.

As part of Sprint's purchase of US Unwired, which has been approved by both boards of directors, the companies will apply for a stay of the lawsuit. The action will be withdrawn when the agreement closes.

"This acquisition would bring an end to a long partnership with the management and shareholders of US Unwired," Gary Forsee, Sprint's CEO, said in a statement. "We appreciate their efforts over the years to grow the Sprint business in its assigned territories."

Based in Lake Charles, La., US Unwired provides Sprint service to 500,000 subscribers in nine states. The company has 600 employees and had revenues of $408 million last year.

Provided regulators approve, the US Wireless acquisition should close in the third quarter, Scott Stoffel, a Sprint spokesman, told internetnews.com, adding it's too early to speculate about management or staffing changes.

"There will be no changes until after the tender offer is completed," Stoffel said. "At that time, the companies will review the situation."

Robert Piper, US Unwired president and CEO, said in a statement that the company had experienced tremendous growth in recent years and that the sale to Sprint "realize[s] continued value for our shareholders."

Sprint and Nextel agreed to merge in September to better compete with Cingular and Verizon Wireless for voice and data customers. The new company will serve more than 40 million wireless subscribers.

Provided the merger wins approval of the Federal Communications Commission and Department of Justice, the new company will be known as Sprint and based in Overland Park, Kan.

But the Nextel name won't disappear. It will be affixed to a line of business-oriented products and services, including the nationwide digital walkie-talkie service. Services sold under the Nextel brand will be aimed at selected businesses and government agencies.