One month after announcing plans to acquire Straight Path Communications (SPC) in a $1.6 billion transaction, AT&T withdrew from the deal yesterday after SPC confirmed its acceptance of a $3.1 billion counteroffer submitted by Verizon Wireless. Following on a similar agreement that AT&T had signed in January to acquire the spectrum assets of FiberTower, AT&T’s proposed purchase of SPC had been intended to bolster AT&T’s long-term ambitions to provide fifthgeneration (5G) network services through the use of highly-coveted millimeter wave channels in spectrum bands above 24 GHz. FiberTower supplies backhaul services to wireless carriers through its stable of millimeter wave licenses in the 24 MHz and 39 GHz bands. Numbering 868 FCC licenses in the 28 GHz and 39 GHz bands, the millimeter wave spectrum assets of SPC, meanwhile, represent nearly 95% of the commercially-available 39 GHz spectrum capacity nationwide.
AT&T’s agreement with SPC included a provision that allowed AT&T to withdraw from the deal if SBC received a “superior offer.” Shortly after the AT&T-SPC deal was announced, Straight Path confirmed that it had received a $1.8 billion counteroffer from a then-unnamed “multi-national telecommunications company.” Although AT&T later revised its previous offer within a five-day window prescribed by the initial agreement, observers indicate that the third-party bidder responded with improved offers that raised the proposed purchase price to $2.3 billion as of last week, then finally to $3.1 billion. In a press release which officially identified the third-party bidder as Verizon, SPC said yesterday that its board of directors had “determined, in good faith, after consultation with its financial advisors and outside legal advisors, that the transaction with Verizon constituted a superior proposal under the AT&T merger agreement.” AT&T then informed SPC that it had decided “not to make any new bids or proposals . . . or to propose any amendments to the AT&T merger agreement.”
Verizon’s offer of $184 per SPC share in Verizon stock represents a premium of 404% over SPC’s closing share price of $36.48 on April 7, the business day before SPC disclosed its agreement with AT&T. Contingent upon receipt of FCC and other required approvals, the parties anticipate closing within nine months.