Case | HBS Case Collection | June 2007 (Revised January 2009)

Nextel Partners: Put Option

by Timothy A. Luehrman and Douglas Scott

Abstract

Nextel Partners' shareholders have voted to exercise a put option that will require the company's largest shareholder, Sprint Nextel Corp., to purchase all the shares it does not already own. However, the put option does not stipulate a price to be paid, but rather a process involving third-party appraisers, who will set the sale price. This is so even though Nextel Partners is a publicly traded company. Raises issues regarding the definition and determination of "fair market value" and permits discussion of topics such as control premia, discounts for illiquidity, and possible departures by the stock price from "fair market value."

Keywords: Mergers and Acquisitions; Stock Options; Price; Public Ownership; Valuation;

Citation:

Luehrman, Timothy A., and Douglas Scott. "Nextel Partners: Put Option." Harvard Business School Case 207-128, June 2007. (Revised January 2009.)