M&A Strikes The Telecom Sector: Verizon Agrees To Acquire Straight Path Communications

Straight Path Communications Inc STRP, a holder of an extensive portfolio of 39 GHz and 28 GHz wireless spectrum license and developer of next generation wireless technology, confirmed Thursday morning it has agreed to be acquired by Verizon Communications Inc. VZ in a deal which values shares at $184.

Thursday's announcement concludes a bidding war whereby Straight Path confirmed on three separate occasions that a "multi-national company," since identified as Verizon, presented offers that were superior to AT&T Inc. T's offer of $95.63 per share.

The Deal

As part of the merger agreement, Verizon will acquire Straight Path for $184 per share in a deal, which values the company at $3.1 billion. The all-stock transaction represents a whopping premium of 486 percent versus Straight Path's closing price on January 11, 2017, of $31.41. This represents the day before Straight Path announced an Federal Communications Commission settlement and strategic alternatives process. The deal also implies a 404 percent premium to Straight Path's closing price of $36.48 on April 7, the last day prior to AT&T's offer.

However, a $184 per share offer does represent a discount to Straight Path's closing price of $223.79 on Wednesday.

The agreement also calls for Verizon paying on behalf of Straight Path a termination fee of $38 million to AT&T. In return, AT&T agreed not to make any new bids or proposals to Straight Path.

At time of publication, shares of Straight Path were down 20.33 percent at $178.30 in Thursday's pre-market. Shares of Verizon were relatively flat, down just 0.06 percent at $46.35.

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