Sprint-Nextel Deal? Done!

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Telecommunications giants Sprint Corp. and Nextel Communications Inc. have agreed to merge in $35 billion deal that would create the nation's third largest wireless telephone service provider.

The widely rumored deal announced Wednesday would create a company that would be known as Sprint Nextel that would had about $40 billion in combined revenue in the latest year and would serve more than 35 million wireless subscribers, trailing only the industry leaders Cingular Wireless and Verizon Wireless.

The acquisition is expected to give the new company more than 35 million U.S. customers and create the nation's third-largest cell phone player, behind Cingular Wireless and Verizon Wireless, reports CBS MarketWatch.

Sprint would get access to Nextel's large base of business customers as a result of the deal while Nextel would get an opportunity to expand faster as it was approaching a decision on a big investment in upgrading its network infrastructure.

The deal was structured as merger of equals that values each company at about $35 billion.

After completion of the deal, the companies said that Sprint's local telecommunications business would be spun off to the combined company's shareholders. The local telecom business accounted for about $6 billion of the combined company's revenues.

Sprint Nextel will have its executive headquarters in Reston, Va., where Nextel is now based and its operational headquarters in Overland Park, Kan., where Sprint has its headquarters.

Sprint chairman and chief executive Gary D. Forsee will become president and CEO of Sprint Nextel, and Timothy M. Donahue, currently president and CEO of Nextel, will become chairman of the new company.

The new company's board would consist of 12 members with six from each company.

"This merger positions Sprint Nextel for greater success than either company could have achieved alone," Forsee said in a statement.

Sprint currently ranks as the nation's third biggest wireless company as well as the third largest in long-distance service. Nextel ranks fifth in U.S. wireless service.

Under terms of the deal, Sprint shareholders would get one share of the new company for each Sprint share while Nextel shareholders would get the equivalent of 1.3 Sprint Nextel shares for each of their shares.

At today's rates, each Nextel share would be exchanged for 1.28 Sprint Nextel shares and 50 cents in cash.

The exact breakdown for Nextel shareholders will be determined later, but the cash payment won't exceed $2.8 billion.