[CAI Wireless to be acquired by MCI WorldCom]
NEW YORK, April 16 (Reuters) - CAI Wireless Corp. (BB:CWSS), a wireless cable television company, said on Friday it agreed to be acquired by MCI WorldCom Inc., the No. 2 U.S. long distance company, for about $408 million.
The wireless licenses controlled by CAI Wireless will allow MCI WorldCom to reach customers' homes or businesses without going through the Baby Bell's local phone networks.
MCI WorldCom declined to comment.
The deal follows a similar move by MCI WorldCom's rival, Sprint Corp., which on Monday agreed to buy wireless cable television company People's Choice TV Corp. (BB:PCTV) for $103 million.
CAI said MCI WorldCom agreed to buy it for $24 a share in cash. Based on CAI's 17 million shares outstanding, the deal is valued at $408 million.
Shares of CAI Wireless closed on Friday at $22.625, up $1.625 in bulletin board trading. CAI's shares traded as low as $2.125 at the end of March before reports that MCI WorldCom bought the bonds of CAI, People's Choice and two other wireless cable companies.
Since then, shares of CAI and other wireless cable companies soared as MCI WorldCom and Sprint competed for the various properties.
CAI's wireless spectrum, called MMDS (multichannel multipoint distribution service), uses microwave frequencies to provide television service.
Technological difficulties and production problems hobbled the wireless cable industry's efforts to compete successfully against the traditional cable TV providers.
Many of the wireless cable companies filed for bankruptcy, but their licenses are still lucrative for the long distance companies, which can use the spectrum to bridge the gap between their long distance networks and customers' homes or businesses, analysts said.
CAI has been looking for a strategic partner since it emerged from bankruptcy in October 1998.
All the major U.S. long distance carriers have been seeking alternatives to the near monopoly that the Baby Bell networks have for accessing customers' homes and businesses.
For instance, AT&T Corp., the largest long distance company, recently paid $55 billion to buy cable TV operator Tele-Communications Inc., gaining a direct connection outside the Bell's networks to customers' households.
CAI said the MCI WorldCom deal is subject to the completion of a definitive agreement and regulatory approvals.
CAI said it ended discussions with other potential strategic partners and agreed to deal exclusively with MCI WorldCom until a final pact is negotiated.
MCI WorldCom entered into agreements to buy more than half of CAI's common stock from certain institutional holders. MCI WorldCom also acquired a significant amount of CAI's debt and secured credit facility, CAI said.
CAI said it adopted a shareholder rights plan which would be triggered under certain circumstances if any party, other than MCI WorldCom, tried to acquire more than 15 percent of the company. |
