Verizon to buy Straight Path for $3.1 bn, beating AT&T’s $1.6 bn offer

Verizon 5G networkUS telecom major Verizon is set to buy Straight Path Communications for $3.1 billion, beating AT&T’s offer for $1.6 billion.

Straight Path, based in Glen Allen, Va., holds millimeter wave spectrum configured for 5G services, including 39 GHz licenses that serve the entire country and 28 GHz assets in major markets.

“Verizon now has all of the pieces in place to accelerate the deployment of 5G,” said Hans Vestberg, president of global network and technology at Verizon. “Combined with our recent transactions with Corning Incorporated, XO Communications, and Prysmian Group, this is another step to build the next-generation network for our customers.”

Boards of directors of both Straight Path and Verizon have approved the deal. On April 9, AT&T had announced its $1.6 billion deal with Straight Path. Verizon will now pay on behalf of Straight Path a termination fee of $38 million to rival telecom operator AT&T.

AT&T last month said it will buy Straight Path to boost its 28 GHz and 39 GHz millimeter wave spectrum for 5G roll outs. Straight Path shareholders were to receive $1.25 billion, or $95.63 per share, through AT&T stock.

The acquisition of Straight Path for $184 per share in Verizon stock, implies a premium of 486% to the closing price of Straight Path common stock of $31.41 on January 11, 2017, the day before Straight Path announced its FCC settlement and strategic alternatives process.

There will be 404% premium to the closing stock price of $36.48 on April 7, 2017, the business day prior to entry into the AT&T Merger Agreement.

Evercore served as exclusive financial advisor to Straight Path and Weil, Gotshal & Manges served as company counsel on this transaction. Debevoise & Plimpton LLP served as counsel to Verizon on this transaction.

Baburajan K