Price Communications Corp.’s president Robert Price said his company is not pursuing a merger agreement with Vanguard Cellular Systems Inc. despite recent reports that suggested the company might be interested in such a deal.
A Toronto Dominion report dated Sept. 15 quoted Dow Jones News Service as saying “Price Communications would be willing to purchase Vanguard for $25 to $27 per share if the deal were accretive to the earnings of the combined entity.”
Toronto Dominion noted it could not reach officials at either company at the time it published its report. However it did say, “We … view the deal as a good strategic fit. The companies have complementary East Coast footprints with zero overlap, and both have deployed the same digital [Time Division Multiple Access] technology.
“The combined entity would represent a strong presence in non-urban markets along the Eastern seaboard,” continued the Toronto Dominion report.
Vanguard has widely been thought of as a prime acquisition candidate, fueled by a decision it made earlier this year to focus on its core Northeastern markets by selling off some of its assets in the South. Vanguard has completed the sale of its Myrtle Beach, S.C., market and is awaiting the close of the sale of its Florida and North Carolina markets.
Following the transactions, Vanguard’s service area will include a cluster of markets in the Mid-Atlantic region, a Cluster around West Virginia and a New England cluster. Price’s service area covers parts of Georgia, Alabama, South Carolina and Florida.
Though it may not be interested in an agreement with Vanguard right now, the company is looking to expand through acquisitions or market swaps, said Price.
“We have a lot of pops in the Southeast,” said Price. “Three million pops is too many to have in one geographic area.
“We would be willing to swap a million here or there for more pops in another part of the country,” continued Price, who said he hasn’t pinpointed any particular area of the country to enter.
Analysts also think Price is likely to seek agreements to expand its footprint.
Credit Suisse First Boston this month initiated coverage of Price and issued a report that said “Price Communications represents an undervalued, mature cellular operator with strong operating cash flow and free cash flow potential. The company is highly leveraged and is likely to seek to make acquisitions and/or swap various properties in the future in the hopes of helping to gain increased scale.”
CSFB said Price has “followed a strategy of purchasing businesses it considers undervalued, improving their operating performance, and ultimately selling them when operations and commensurate values have been sufficiently enhanced.”
CSFB pointed to Price’s Oct. 6, 1997, acquisition of Palmer Wireless for $876 million as an example. The company disposed of all its other communications assets prior to the acquisition, and the former Palmer Wireless is the only enterprise in which Price Communications currently has an investment, said CSFB.
Concurrent with the acquisition, Price divested the Fort Myers, Fla., metropolitan statistical area and later divested the Georgia 1 rural service area, said the firm.
“However, we believe Price is likely to continue to look for acquisitions and/or value-enhancing trades to increase its size and competitive position,” said CSFB.
