CHICAGO-American Mobile Satellite Corp. announced it completed its $100 million acquisition of Ardis last week, creating what it called the first fully-deployed, integrated terrestrial/satellite network for two-way wireless data services.
Ardis, formerly owned by Motorola Inc., operates one of the largest terrestrial wireless data communications networks in the country. AMSC operates a geostationary satellite and related terrestrial base stations. Together, the combined company boasts more than 80,000 subscribers, 90 percent of which are data users, and annual service revenues of more than $60 million, 80 percent derived from data services.
Walt Purnell, previously president and chief executive officer of Ardis, will be the combined company’s president. Gary Parsons, formerly president of AMSC, will continue on as chief executive and also will become chairman of the board, replacing former chairman Jack Shaw-who will serve as director of the company and chairman of the executive committee.
As a division of Motorola, Ardis was low on the budget priority list. As an integral new addition to AMSC, officials at Ardis expect to see that change.
“This transaction solidifies our position as a single-source for a broad range of cost-effective nationwide wireless communications services,” Purnell said. “It represents the culmination of a long-term partnership between Ardis and American Mobile, and enables us to provide the first fully deployed and owned terrestrial/satellite network that provides complete U.S. coverage.”
The two networks are expected to complement each other well. AMSC’s satellite system proved popular with the long-distance communications required by the transportation industry, while Ardis’ terrestrial network service has been implemented mainly by field service personnel desiring good in-building penetration. Field service customers include Sears, Roebuck & Co., which recently extended its service contract for its repair service group through 2001, and Enron Energy Services Inc., providing two-way network transmission of wireless energy meter reading.
Customers of the combined company either can stick with just one of the networks, or can upgrade to devices with modems for both networks if they desire.
The combined company expects to see additional synergies in its sales force as well. AMSC’s team focused on regional business accounts while Ardis concentrated on larger corporate national deals.
The acquisition originally was announced Dec. 31, and received FCC approval in February. AMSC paid half the $100 million bill in cash and the other half in stock. AMSC’s stock price rose from $8.50 at the time of the merger announcement to $14.80 at press time.
In a separate transaction, the newly merged company closed a $335 million high-yield private market debt offering of 225,000 units of 12-percent senior notes due 2008 and warrants to buy 1.26 million shares of its common stock at an exercise price of $12.51.
The proceeds will go to fund the cash obligation of the Ardis acquisition, as well as pay existing debt, buy enough government securities to fund three years of interest payments and provide for overall working capital needs, said Ardis and AMSC.
The combined company also completed its restructuring of its existing $200 million guaranteed bank financing. Morgan Guaranty Trust Co., Toronto Dominion Bank and Bank of America NT&SA will serve as underwriters of the new debt facility, which is guaranteed by shareholders Hughes Electronics Corp., Singapore Telecommunications Ltd. and Baron Capital Partners L.P.
