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American Tower to Buy SpectraSite in Deal
May 04, 2005 11:45 AM ET
By MARK JEWELL
BOSTON (AP) - American Tower Corp. agreed on Wednesday to pay $3.1 billion to acquire rival SpectraSite Inc. in a deal to create a network of 22,600 wireless and broadcast towers and accelerate consolidation in the tower industry. Shares of SpectraSite soared nearly 8 percent in early trading, while American Tower shares fell nearly 2 percent.
The stock transaction follows a string of mergers among wireless carriers who rent or lease tower space and are seeking additional signal capacity to move beyond voice services as more consumers use cell phones to download video content and play games.
"The carriers are very aggressively building out networks, and the networks need towers to build out these services," said Clayton Moran, an analyst with Stanford Group.
Boston-based American Tower expects to issue 181 million shares to acquire Cary, N.C.-based SpecraSite in a transaction the firms expect to close in the second half of 2005, subject to shareholder and regulatory approvals.
The deal to create the nation's largest tower company with more than $1 billion in annual revenue will combine American Tower's 14,800 towers _ 12,400 in the United States, with the rest in Brazil and Mexico _ with SpectraSite's 7,800 U.S. communications sites.
That will give the companies a market-leading share of more than one-quarter of all U.S. communications towers _ but probably not enough to draw antitrust concerns from federal regulators, Moran said.
Rivals include Houston-based Crown Castle International, with 10,600 towers in the United States, and Sarasota, Fla.-based Global Signal Inc., with 4,200 sites. In February, Global Signal made one of the early moves toward industry consolidation with a $1.2 billion deal giving the company rights to operate or lease more than 6,600 Sprint towers.
The American Tower-SpectraSite deal could slow the pace of tower construction as the combined company expands by filling capacity on existing or new towers, rather than having to build separate towers operating below capacity had the companies continued as rivals, said Jeff Kagan, an Atlanta-based independent telecommunications analyst.
"It will be less of a black eye on the landscape, and will be healthier for the companies," Kagan said.
The boards of both companies have unanimously approved the agreement. SpectraSite shareholders will receive 3.575 shares of American Tower Class A common stock for each common share held. Based on American Tower's May 3 closing stock price, this exchange ratio equals $61.53 per share, a 9.5 percent premium over Tuesday's closing SpectraSite price.
American Tower shareholders would own about 59 percent and SpectraSite shareholders about 41 percent of the combined company, which will combine American Tower's current debt total of $3.1 billion and SpectraSite's $750 million debt.
The combined company will carry the American Tower name, bringing together American Tower's 726 employees with SpectraSite's 455 workers. The corporate headquarters will be in Boston.
SpectraSite's shares rose $4.42, or 7.9 percent, to $60.62 in late morning trading on the New York Stock Exchange, near the higher end of their 52-week range of $35.60 to $63.99.
American Tower's shares, which have traded in a 52-week range of $12.50 to $19.28, fell 33 cents, or 1.9 percent, to $16.88 on the NYSE.
Separately, American Tower on Wednesday reported a smaller first-quarter net loss compared to last year, lifted by higher rental and management revenue and slightly lower expenses. The company posted a net loss of $31.6 million, or 14 cents per share, compared with a year-earlier loss of $48.2 million, or 22 cents per share.
Wall Street had forecast a loss of 13 cents per share, the average estimate of seven analysts surveyed by Thomson Financial.
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On the Net:
American Tower Corp. www.americantower.com
SpectraSite Inc. www.spectrasite.com
© 2005 AP |
