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ARCH TO ACQUIRE WESTLINK AS PART OF NPCS STRATEGY

A landmark merger deal announced last month, in which Arch Communications Group Inc. agreed to pay $340 million for Westlink Holdings Inc., will establish the nation’s third largest paging company and reunite two long-time industry players.

The fusion of these two companies is a perfect fit in terms of coverage, said Westborough, Mass.-based Arch. Very little overlap exists between the companies’ markets. Westlink of San Diego completes Arch’s national footprint adding about 500,000 subscribers to Arch’s base, for a total of about 2.5 million customers.

Westlink, a 49.9 percent partner in Benbow PCS Ventures Inc., delivers Arch an opportunity in the narrowband personal communications services arena. June Walsh’s California-based telecommunications companies Cal Autofone and Radio Electronic Products Co. own 50.1 percent of Benbow.

Benbow “was an important consideration” in Arch’s purchase decision, said Robert Meinzer Jr., president and chief executive officer of Westlink Paging. The company won narrowband PCS licenses in the Western and Central regions of the United States.

In the early 1980s, Meinzer and C.E. “Ed” Baker, chairman and CEO of Arch, worked for Communications Industries’ paging subsidiary Gencom. Baker left in 1986 to start U S West Paging and, shortly after, Meinzer joined him as chief operating officer. Two years later Baker left U S West, founded Arch and Meinzer became U S West Paging’s CEO. In 1994, Meinzer formed Westlink Paging to purchase U S West’s paging operation with Merrill Lynch Capital Partners of New York.

Meinzer and Baker are together again, but their new positions and titles are undetermined. “We have been working to get this deal done,” said Meinzer, explaining time hasn’t allowed for such details.

In order to keep up with the pace of consolidation, Meinzer said he recognized a need for national presence to continue to be successful in conventional paging and two-way messaging markets. “Strategically this was a way to get to a national presence.”

By way of an 11 percent stake in nationwide licensee PCS Development Corp., Arch already is involved in narrowband PCS. Arch also said it plans to resell PCSD’s two-way voice services.

Benbow hasn’t yet decided on a messaging protocol, Meinzer said. Beta testing of Motorola Inc.’s ReFLEX platform is scheduled to begin during the second quarter. While Benbow plans to provide two-way data, alphanumeric capability, PCSD plans to offer two-way voice services, said Meinzer.

Charlie Diao of Prudential Securities in New York advised Arch on the Westlink deal. Diao explained Arch’s threefold expansion approach. The company has grown by opening new markets, securing operations in individual markets that serve as launch pads for Arch paging services and through “strategic acquisitions of significant scale.” Westlink is among the latter. By adding Westlink to its portfolio, Arch will have operations in 90 of the top 100 U.S. markets.

Arch said it expects to finance the acquisition through existing bank facilities and borrowings. The purchase price includes repayment of Westlink’s debt. The merger awaits regulatory approvals.

Arch initially will retain the Westlink name in Westlink’s current markets.

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