HOUSTON—In the world of tower companies, where size definitely matters, No. 1 has just been usurped. Crown Castle International has skipped ahead of American Tower Corp.—the nation’s largest tower company—by buying Global Signal Inc. The deal, valued at $5.8 billion, will form a new No. 1 player commanding more than 24,000 tower sites.
Currently, ATC counts 22,000 sites, CCI has 13,000 and Global Signal has 11,000. If Crown Castle’s acquisition of Global Signal is successful, ATC will fall into the No. 2 position and SBA Communications Corp. will move into the No. 3 slot with 7,200 tower sites.
“We expect this extraordinary combination of companies with the most towers in the best markets to create significant value to our customers and shareholders,” stated John Kelly, chief executive of CCI.
Under the deal, CCI will assume debt of about $1.8 billion, and Global Signal stockholders can either convert their shares into $1.61 CCI shares or take $55.95 per share in cash, which is a 12-percent premium over Global Signal’s stock price of $50.10 per share as of Thursday’s closing price.
To fund the cash portion of the acquisition, CCI said it plans to use its existing credit facility, which includes a revolving credit line of $250 million as well as an add-on to its secured loan of $300 million. After the closing, expected to take place in the first quarter of next year, CCI said its debt would total about $5.4 billion.
Global Signal’s stock jumped 10 percent in response to the deal to $55.26 per share, while Crown Castle’s fell slightly to $34.23 per share.
The combined company’s estimated enterprise value is $16 billion, and it is expected to produce annual site rental revenues of $1.2 billion. CCI said merging the two companies will generate cost synergies of between $12 million and $15 million annually within one year.
Global Signal’s three largest shareholders, Fortress Investment Funds, Greenhill Capital Partners L.P. and Abrams Capital LLC, represent about 40 percent of Global Signal’s outstanding shares and have already agreed to vote in favor of the acquisition.
CCI said its board will grow from 10 to 13 members upon the closing of its acquisition. The board will consist of Kelly and Ben Moreland, chief financial officer of CCI, along with eight outside directors from CCI and three outside directors of Global Signal, including current board member and the company’s former CEO, Wesley Edens.
