The headline from April 10 said Straight Path Communications (STRP 103.90, +12.20, +13.3%) was going to be acquired by AT&T (T 40.28, unch) in a $1.25 billion stock deal, which translated into an offer of $95.63 per share. The headline that grabbed the market's attention even more, though, was the one that indicated AT&T's offer was a 162% premium to STRP's closing price on April 7. Based on a company filing from Straight Path, that premium could be going up even more courtesy of another potential bidder.
In an 8-K filing, Straight Path said it received a letter on April 13 from a third party that had been making a run at acquiring Straight Path before the company agreed to be acquired by AT&T.
The upshot of that disclosure is that the third party indicated in its letter that it is still interested in Straight Path and is currently evaluating a "topping bid" that it thinks will be more appealing to Straight Path and its shareholders.
Straight Path, apparently, is a much more valuable asset than the market was giving it credit for prior to the M&A activity, as it now stands to be the possible object of wireless spectrum affection in a pricey bidding war.
The "third party" was not given a name in the filing, although press reports are speculating that it could be Verizon (VZ 48.76, +0.14, +0.3%). The latter company is reporting its first quarter results before the market opens on Thursday, and if there are no disclosures made before then, management is certain to face questions from analysts aiming to gauge any possible interest it might have in acquiring Straight Path.
In the meantime, this is all proving beneficial for Straight Path's stock, which is up 13% in early action and trading above AT&T's deal price.
According to the merger agreement, Straight Path would have to pay AT&T a termination fee of $38 million if the company's Board changed its recommendation in favor of the AT&T merger due to receiving another superior proposal or due to an intervening event defined in the merger agreement.