Nextel unit loses battle over brand

An independent arbitrator denied a request by Nextel Partners for a preliminary injunction to stop Sprint Nextel from rolling out its new brand following the $36bn merger of Sprint and Nextel Communications.

However, Nextel Partners, which is 32 per cent owned by Sprint Nextel and uses the Nextel network and brand in markets the old Nextel does not cover, said it would still seek monetary damages and other relief under the arbitration
process.

Sprint Nextel was formed in August when Sprint completed its purchase of Nextel, sparking disputes with Nextel Partners and Sprint affiliates. Sprint has already bought or agreed to buy three of 10 affiliates to solve brand disputes.

Nextel Partners had sought the injunction as part of its battle to maximise the value of the company ahead of its proposed acquisition by Sprint Nextel.

The acquisition of Nextel by Sprint triggered a put option in an agreement between Nextel and Nextel Partners under which Nextel Partners has the right to force Sprint Nextel to buy the 68 per cent of Nextel Partners it does not own.

However, the two companies are continuing to argue over the valuation to be placed on Nextel Partners. Differences between the two companies also emerged yesterday in their interpretation of the arbitrator’s ruling.

In separate statements, Sprint Nextel and Nextel Partners disagreed over whether or not arbitrators found Nextel Partners was likely to prevail in its claim that Nextel’s use of the Sprint Nextel brand violated their agreements.

Nextel Partners said in a regulatory filing that the arbitrators found it would probably prevail, while Sprint Nextel said the findings showed the opposite was true.

Nextel Partners said it intends to continue to pursue the claims in its arbitration demand and to seek monetary damages and other relief, but it could not assure the outcome or timing of further proceedings.

Nextel Partners shares have gained more than 40 per cent since, in December, Sprint agreed to buy Nextel.