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| Protecting the Rights of Shareholders and Consumers |
Virgin Mobile USA, Inc. Securities Litigation
Virgin Mobile USA, Inc. (NYSE: VM) Shareholder class action lawsuit over alleged unfair takeover
On July 28, 2009, Virgin Mobile USA, Inc. (“Virgin Mobile” or the “Company”) announced that it agreed to sell the
Company to Sprint Nextel Corp. ("Sprint") (NYSE: S). Under the terms of the agreement, each Virgin Mobile
shareholder will receive Sprint shares having a 10-day average closing price equivalent to $5.50 per Virgin Mobile
share for a total equity value of approximately $483 million.
The class action complaint alleges that the price is unfair and the Company did not take adequate steps to
maximize shareholder value. In particular, Sprint already owns approximately 13.1% of Virgin Mobile, which uses
Sprint's cellular network to offer its services, and Sprint has entered into voting agreements that, together with the
Virgin Mobile shares it owns, comprise approximately 40% of the outstanding voting power of Virgin Mobile. In
addition, the Company agreed to refrain from soliciting competing offers that may be superior than the Sprint offer
and also agreed to pay Sprint a termination fee of $14.2 million in the event the agreement is terminated under
certain circumstances that will all but ensure that no superior offer will ever be forthcoming.
The class action lawsuit alleges that the Virgin Mobile Board of Directors breached their fiduciary duties to Virgin
Mobile shareholders by failing to conduct an open and fair auction process for the Company.
On July 28, 2009, Virgin Mobile USA, Inc. (“Virgin Mobile” or the “Company”) announced that it agreed to sell the
Company to Sprint Nextel Corp. ("Sprint") (NYSE: S). Under the terms of the agreement, each Virgin Mobile
shareholder will receive Sprint shares having a 10-day average closing price equivalent to $5.50 per Virgin Mobile
share for a total equity value of approximately $483 million.
The class action complaint alleges that the price is unfair and the Company did not take adequate steps to
maximize shareholder value. In particular, Sprint already owns approximately 13.1% of Virgin Mobile, which uses
Sprint's cellular network to offer its services, and Sprint has entered into voting agreements that, together with the
Virgin Mobile shares it owns, comprise approximately 40% of the outstanding voting power of Virgin Mobile. In
addition, the Company agreed to refrain from soliciting competing offers that may be superior than the Sprint offer
and also agreed to pay Sprint a termination fee of $14.2 million in the event the agreement is terminated under
certain circumstances that will all but ensure that no superior offer will ever be forthcoming.
The class action lawsuit alleges that the Virgin Mobile Board of Directors breached their fiduciary duties to Virgin
Mobile shareholders by failing to conduct an open and fair auction process for the Company.
