Vigorous consolidation in the U.S. paging industry continues as MobileMedia Corp. closes its $188.5 million purchase of the paging and messaging business of South Carolina-based Dial Page Inc.
The rest of the Greenville company will be merged into Nextel Communications Inc. Nextel has an agreement to purchase Dial Page’s dispatch subsidiary, Dial Call Communications Inc., a deal which may be consummated by year’s end.
Earlier this year, Dial Page stated concerns that consolidation in the paging industry was creating fierce competition that could require Dial Page to acquire more capital and join forces with one or more other substantial paging providers.
MobileMedia made the offer to Dial Page in February, Dial Page shareholders voted in favor of the sale in June and the necessary consent from note holders has been received, MobileMedia said.
MobileMedia is acquiring Dial Page’s assets and liabilities and made a tender for 85 million outstanding senior Dial Page notes. The Ridgefield Park, N.J., company is making the transaction through its wholly owned subsidiary, MobileMedia DP Communications Inc. The deal is scheduled to be completed by the end of the month.
“We’re the second largest paging company in the industry, we have the economies of scale and we have a nationwide narrowband PCS (personal communications service) license. We are in a position to do this,” said MobileMedia Treasurer Kevin Shea.
This is MobileMedia’s first acquisition. The company has its roots in Metromedia Paging, a company formed through acquisitions during the 1980s. It was purchased by Southwestern Bell Corp. in 1987, then acquired in 1993 by the California investment firm of Hellman & Friedman. The company was named MobileMedia and made its first public offering in June. Growth through acquisition is a stated strategy of the firm.
MobileMedia has 1.7 million subscribers with operations in 19 states, covering 40 percent of the U.S. population. Dial Page has about 350,000 subscribers and sells its service in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia.
The Dial Page purchase brings MobileMedia’s coverage up to 54 percent of the U.S. population, and provides the missing southeastern toe in MobileMedia’s footprint.
MobileMedia also is acquiring $40 million in Dial Page bank debt. “We intend to pay that off immediately through a MobileMedia bank facility,” Shea said. MobileMedia also intends to pay off the senior notes.
Dial Page was incorporated in 1991, but it has roots in a Carolinas radio common carrier operation that bought its first paging system in 1983, said longtime Dial Page leader David Odom. He is Dial Page’s executive vice president of paging engineering.
“By the end of 1985, we had 25,000 subscribers. Our name recognition is strong,” Odom said. MobileMedia will keep the Dial Page name in southeastern markets for a time, Shea said.
Dial Page also has been a reseller of nationwide paging and messaging service for BellSouth Corp.’s Mobilecomm subsidiary and SkyTel Corp.
Net proceeds from the sale of Dial Page’s paging business to MobileMedia won’t result in the issuance of any additional Nextel shares, Dial Page said.
After the transaction, MobileMedia DP will be merged with MobileMedia Corp.’s other primary subsidiary, MobileMedia Communications.
