NEW YORK - Sprint Nextel Corp plans to buy wireless affiliate iPCS Inc (IPCS.O) for about $426 million excluding debt, and the two companies have agreed suspend all litigation between them.

Sprint will begin a cash tender offer to buy all iPCS shares for $24 a share, a 34 percent premium to its Friday closing price of $17.88, the two companies said on Monday. Sprint also agreed to assume $405 million of debt, for a total deal value of $831 million.

Sprint and iPCS will seek to suspend all pending litigation between them, with final resolution upon closing of the deal, expected either in late 2009 or early 2010. As a result, Sprint said it no longer has to divest its iDEN network in some iPCS markets.

IPCS, which has exclusive rights to use the Sprint brand in its operating regions, has been battling with the No. 3 U.S. mobile service provider since it bought Nextel Communications in 2005 to form Sprint Nextel. IPCS wanted Sprint to stop operating the Nextel network in IPCS markets.

The transaction value is 6.4 times estimated 2010 adjusted earnings before income, taxes and depreciation, the companies said in a statement. Sprint forecast $30 million of annual cost savings and expects the deal to add to free cash flow in 2010.

Sprint shares rose 1 cent to $3.48 in premarket trading while IPCS shares jumped $5.97 to $23.85. (Reporting by Tiffany Wu; Editing by Derek Caney)