Arch Wireless Inc. and Paging Network Inc. announced the completion of their merger Friday, creating the largest paging carrier in North America and adding a significant two-way wireless data player to the wireless Internet game.
The combined company, which will keep the Arch Wireless name and headquarters, boasts more than 13 million messaging units in service and a nationwide sales force of about 1,600. The two will consolidate their respective networks, adding PageNet’s nationwide ReFLEX 25 two-way messaging network to Arch’s existing network.
“In a period of dramatic industry change, Arch Wireless is now positioned to play a prominent role in the wireless data value chain as the owner of one of the nation’s most comprehensive data networks and one of the largest nationwide providers of wireless services,” said Ed Baker, Jr., chief executive officer of Arch.
Lyndon Daniels, Arch president and chief operating officer, said efforts to integrate the two businesses are already underway, and that he expects the process to take 18 months.
“While we do not underestimate the challenge of integrating the two companies, we do expect a smooth integration for our customers,” he said, noting PageNet is Arch’s 35th acquisition.
Under the terms of the merger, $1.2 billion of PageNet senior notes were converted into Arch common stock. Also, PageNet stockholders received about 4.8 shares of Arch stock for each 100 shares of PageNet stock held. In addition, PageNet stockholders and senior noteholders received about 3.8 shares of Vast Solutions Inc. common stock for each 100 shares of PageNet stock held, resulting in bondholders owning 60.5 percent of Vast, stockholders holding 20 percent and the combined company 19.5 percent.
Based on pro-forma adjusted operating results for the third quarter, the combined company had annualized net revenues of about $1.4 billion and earnings before interest, taxes, amortization and depreciation of about $400 million. The two expect more than $100 million in cost savings as a result of the merger.
