Sprint Nextel Corp. rejected an offer by South Korea's SK Telecom and private equity firm Providence Equity Partners to invest $5 billion in the company and install its former chairman, Tim Donahue, as chief executive, according to people familiar with the matter.

 

Mr. Donahue and the investment consortium proposed the deal before Thanksgiving, sending its bid to Sprint's board in the form of a letter, these people say. The board did not grant Mr. Donahue or the investors an audience before turning down the offer, these people say.

Sprint is searching for a new CEO after the departure of Gary Forsee last month. Mr. Donahue, who was the CEO of Nextel Communications Inc. and negotiated its sale to Sprint in 2004 for $35 billion, became chairman of the combined company after the merger closed in 2005. He stepped down late last year. He was prepared to return to the helm as CEO and planned to bring in a full slate of top executives to handle marketing and operations, the people familiar with the matter said.