Sprint (NYSE: S) Nextel will pay $426 million to acquire iPCS, which owns and operates part of the Sprint network in the Midwest. The acquisition will end a long-running dispute with the company, which claims that Sprint’s acquisition of Nextel violated an exclusivity agreement with iPCS. Release.

IPCS contends that by Sprint owning the Nextel network, it is competing head-on with iPCS, which was given exclusive rights by the carrier to operate in a territory that covers 81 markets in seven states. It has similar objections with Sprint’s partnership with Clearwire (NSDQ: CLWR). In 2006, a circuit court judge ruled Sprint’s operation of the Nextel network violates iPCS’s exclusive rights, the WSJ reports. Sprint was told by the judge that it would have to divest Nextel assets in order to settle the dispute with iPCS. Given the acquisition, it will no longer have to do that.

The acquisition is expected to close late this year or early next year. Sprint will pay $24 a share, or roughly a 34 percent premium compared to Friday’s closing price, for the company. Sprint will also assume $405 million in debt, bringing the total transaction size to $831 million. Sprint expects there to be about $30 million in annual synergies from the transaction and expects the transaction to be free cash flow accretive in 2010.

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