Paying about a 204% premium to the closing price of Straight Path Comms’ (STRP 89.86, +53.38 +146.33%) on January 11, 2017, the day before STRP announced its FCC settlement and strategic alternatives process, and 162% premium to the closing stock price of $36.48 on April 7, 2017, telecom and digital entertainment company AT&T (T 40.41, -0.8 -0.44%) agreed to pay $95.63 per share to in an all-stock merger to buyout STRP.
For background, according to its annual filing STRP holds a significant number of licenses approved for fixed and mobile wireless spectrum in the United States, providing broad geographic coverage and a large amount of total bandwidth in many areas.
These include licenses in what are known as the 39 GHz (38.6-40 GHz) band and the 28 GHz (27.5-28.35 GHz) portion of the LMDS band. STRP also holds licenses for fixed wireless spectrum in other parts of the LMDS band. It has 39 GHz spectrum licenses covering the entire continental U.S. with an average of more than 800 megahertz ("MHz") of bandwidth in the top 30 U.S. markets (measured by population according to the 2010 U.S. Census), as well as LMDS licenses in many key markets.
As mentioned, the all-stock consideration received by STRP shareholders will be based on a variable number of T common stock issued at transaction close to ensure fixed consideration of $95.63 per share. The companies anticipate a closing within 12 months, subject to FCC review.
STRP’s principal competitors to its current spectrum leasing services are fiber providers such as Level 3 Communications (LVLT 58.94, +0.40 +0.68%), NEON and Verizon, cable companies such as Comcast (CMCSA 37.68, -0.34 -0.91%) and Time Warner, other spectrum license holders such as XO Communications (owned by VZ), long-distance interexchange carriers such as AT&T and Verizon, and the wireless operators that lease Common Carrier fixed microwave service from the FCC.
The deal brings attention to spectrum asset holding peers like Globalsat (GSAT 1.64, +0.02 +1.54%), Sprint (S 8.37, flat), DISH (DISH 63.27, +0.72 +1.15%) and Verizon (VZ 48.62, -0.04 -0.07%).