Another telecom company has offered a $1.8 billion deal
AT&T’s acquisition of Straight Path for its high-band spectrum may not be a done deal after all.
Straight Path says that it received an offer for a $1.8 billion purchase price, in the form of an unsolicited bid from an unnamed “multi-national telecommunications company”, compared to the $1.6 billion total price that AT&T proposed. The new offer is a “superior proposal,” Straight Path concluded, which will allow the company to back out of the AT&T deal unless AT&T makes a better counter-offer.
Straight Path made a filing with the Federal Communications Commission last week that said the company was evaluating an unsolicited offer from a third party; Reuters reported at the time that anonymous sources claimed Verizon was the third-party bidder. Verizon declined to comment to RCR Wireless News on the topic of Straight Path’s new offer.
AT&T offered $95.63 per share and the assumption of Straight Path’s liabilities; the new offer ratchets up the price to $104.64 per share. AT&T has five business days to renegotiate a deal with Straight Path to meet or exceed the new bidder’s offer, and according to Straight Path, the third-party has indicated that its offer will remain outstanding until 11:59 p.m. Eastern Time on May 3.
“We have been informed by Straight Path that their board has received a ‘superior proposal,'” AT&T said in a statement to RCR Wireless News. “Under our existing contract with Straight Path, we have the right to negotiate with the company over the next five business days to match or exceed the new bid. We will evaluate the situation and make a decision in that time frame.”
AT&T’s bid was announced earlier this month and approved by the board of directors at both companies — but as part of its deal, Straight Path did include language allowing its board to change its recommendation should a superior offer be made. If the deal falls through, Straight Path would have to pay AT&T a termination fee of up to $38 million — which Straight Path says the new bidder has offered to pay to AT&T, on Straight Path’s behalf, if Straight Path agrees to the third-party offer. At the same time, the terms of the deal also call for AT&T to make an $85 million payment to Straight Path should the current agreement remain in place but not close by July 9, 2018.
Straight Path currently holds the rights to 868 spectrum licenses in the 28 GHz and 39 GHz spectrum bands covering most of the United States, including spectrum in the country’s 40 largest markets.
Straight Path has had an eventful few months, with the company earlier this year agreeing to a settlement with the FCC over spectrum license build out requirements. As part of the settlement, Straight Path agreed to pay a $100 million civil penalty to the United States Treasury, surrender 196 of its spectrum licenses in the 39 GHz band, and sell the remainder of its license portfolio, with 20% of those proceeds also paid to the Treasury as “an additional civil penalty.”
The settlement stemmed from an FCC Enforcement Bureau investigation that began with an anonymous source publishing allegations that Straight Path falsified build out claims in obtaining renewal of its 39 GHz spectrum licenses. The FCC said it found equipment in support of the spectrum had only been deployed for a “short period of time at the original transmitter locations and that no equipment was present at the time of this investigation at the majority of the relevant locations.”
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