Verizon outbids AT&T with $3.1 bn offer to bag Straight Path
12 May 2017
Verizon Communications Inc outbid rival AT&T to snap up US wireless spectrum holder Straight Path Communications Inc with a $3.1-billion offer, nearly double of AT&T's initial offer.
In April, AT&T offered to buy Straight Path for $95.63 per share, a premium of 162.1 per cent to Straight Path's 10 April closing price.
The tax-free deal, valued at a total $1.6 billion, includes liabilities and $15 million to be paid to the US Federal Communications Commission (FCC).
Verizon yesterday beat AT&T's agreed deal price by offering to pay a total of $3.1 billion comprising $184 per share in stock, a discount of 17.8 per cent to Straight Path's close on Wednesday.
Straight Path's stock had jumped nearly five-fold since early April, just before AT&T tabled its initial offer.
Verizon has agreed to pay AT&T, on behalf of Straight Path, a termination fee of $38 million.
As part of the earlier settlement with FCC, Straight Path will pay the US government 20-per cent of the sale of its spectrum licenses.
Straight Path had announced in January that it had hired investment bank Evercore Partners to help explore strategic alternatives, including a sale.
The deal will give Verizon 735 mmWave licenses in the 39 GHz band and 133 licenses in the 28 GHz band used in mobile communications, which cover the entire US, including all of the top 40 markets.
Verizon, based in New York, said that the deal will accelerate its deployment of next-generation (5G) broadband services throughout the US.
"Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G," said Hans Vestberg, executive vice president and president of global network and technology at Verizon.
"Combined with our recent transactions with Corning Incorporated, XO Communications, and Prysmian Group, this is another step to build the next-generation network for our customers," he added.
