More than a year after first making its intentions known, Verizon Wireless finally acquired regional wireless carrier Price Communications for $1.7 billion, including $550 million in net debt that Verizon Wireless said would be assumed or redeemed.
The acquisition comes months after both companies announced they were going back to the bargaining table to renegotiate a new deal following Verizon Wireless’ planned initial public offering not occurring within the predetermined time frame of the original agreement. The original agreement was valued at more than $2 billion.
For its billions of dollars, Verizon Wireless picks up all of Price’s wireless assets, including its 16 cellular licenses, Price’s TDMA network in the Southeast, 41 company-owned retail stores and a regional call center in Atlanta. Price serves approximately 560,000 customers and covers 3.4 million potential customers in the Southeast under the Cellular One brand name, equating to around $500 per pop paid by Verizon Wireless.
“This transaction greatly enhances the footprint and customer base of Verizon Wireless operations in the fast-growing Southeast, expanding our Atlanta business south to Jacksonville, Fla., east to Augusta, Ga., and further Southeast to the Atlantic coastline, including Savannah, Ga.,” said Denny Strigl, president and chief executive officer of Verizon Wireless.
Under terms of the deal, Price and Verizon Wireless will form a limited partnership with Verizon Wireless controlling and managing the entity. Price’s partnership interest will be exchangeable into Verizon Wireless common stock if the planned IPO takes place in the next four years or into Verizon Communications stock if it doesn’t. The exchange price in the event of conversion into Verizon Communications stock is collared at a minimum of $40 and a maximum of $74 per share. Verizon Communications’ stock closed up 40 cents following the announcement last Wednesday at $48.45 per share.
Once the deal is completed, pending approval from Price shareholders, Price’s operations and services will be switched to Verizon Wireless’ technology standard and brand name.
“Upon closing, we will begin integrating the Price network, converting them to our CDMA digital standard and delivering more consistent service quality and features to our customers as they roam along the eastern seaboard,” Strigl said.
Price said following completion of the deal it will begin liquidating the company.
Since the deal with Verizon Wireless was originally announced last year, Price has spent little capital in attracting new customers or upgrading its service offerings, resulting in little net customer additions this year. The company’s stock closed down $1.20 per share following the announcement to $18.70 per share.
