Sprint Nextel claimed victory in the battle between the company and its affiliate, Kirkland-based Nextel Partners. An arbitration panel yesterday...
Sprint Nextel claimed victory in the battle between the company and its affiliate, Kirkland-based Nextel Partners.
An arbitration panel yesterday denied an injunction against Sprint Nextel — formed after Sprint merged with Nextel Communications — that would have stopped the company from rolling out Sprint as its overall brand.
Nextel Partners asked for the injunction because the brand rollout would exclude the 100 Nextel-branded stores that Nextel Partners owns and operates. The company provides Nextel-brand services in rural markets under a joint agreement with Nextel Communications.
In denying the injunction, a panel of two former federal court judges and a law-school professor found that it was not necessary to stop Sprint Nextel from making the brand changes. It reasoned that the same joint agreement with Nextel Communications gives Nextel Partners shareholders the ability to force a purchase by the same company that also purchased Nextel Communications.
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“The panel has serious questions about the issue of irreparable harm because of the fact that the Joint Venture Agreement contains a ‘put’ or buyout provision,” the panel wrote.
The one exception is that if the Nextel brand becomes a factor when Nextel Partners is being valued for a sale. In that case, it can be “clearly remedied by a monetary award,” the arbitrators said.
“We’re delighted. We regard it as a complete victory,” Sprint Nextel said in a filing yesterday with the Securities and Exchange Commission.
Nextel Partners spokeswoman Susan Johnston declined comment other than to say, “We will continue to defend the interest of our company and our shareholders.”
That could include future arbitration hearings as well as seeking monetary damages.
The decision followed a move by Sprint Nextel last week to convert all 1,600 of its stores to the Sprint brand with the black-and-yellow coloring of Nextel.
Phil Cusick, an analyst with Bear Stearns, said in a note to investors that he didn’t think Nextel Partners would win this ruling, but that it also won’t affect business significantly.
“We believe it is possible that Partners will see little if any drop-off in store traffic over the next few months,” Cusick wrote. “If it did, this ruling should protect Partners’ value.”
Nextel Partners shareholders have requested a meeting to vote on whether to sell the company to Sprint Nextel, which already owns about a third of its shares. A meeting date hasn’t been set.
Tricia Duryee: 206-464-3283 or firstname.lastname@example.org