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AirTouch to Buy Out Telecom Company

Deals: AirTouch will pay $1.65 billion for the 60% of Cellular Communications it does not already own.

April 08, 1996|From Times Wire Services

AirTouch Communications Inc. agreed to buy out the 60% of Cellular Communications Inc. it does not own for $1.65 billion in cash and stock.

The acquisition comes less than a week after AirTouch's former corporate parent, Pacific Telesis Group, agreed to be acquired by Texas-based SBC Corp., the parent of Southwestern Bell, in a deal valued at $16.7 billion.

The deals are part of a series of telecommunication company mergers that are expected to increase in number since the passage of federal legislation permitting the companies to compete much more freely than they could before.

The latest deal, announced Saturday, is worth $55 a share, giving Cellular Communications shareholders a premium of almost $4 from the stock's Thursday closing price of $51.19.

The $1.65-billion price tag includes the assumption of about $200 million of debt, the companies said.

For San Francisco-based AirTouch, the acquisition is a another step in its quest for a nationwide presence. The company, a provider of cellular telephone and paging services, formerly called PacTel Corp., was spun off in 1994 by Pacific Telesis.

"We are interested in having a company that provides national scale and scope benefits to customers. . ," AirTouch Vice Chairman Arun Sarin said in a conference call. "That's what's exciting--we have very significantly positioned the company to grow in the future."

The buyout would give AirTouch full ownership of a venture between the companies that is the leading provider of cellular telephone services in Ohio and Michigan under the Cellular One brand name.

The venture has more than one million subscribers and $674 million in 1995 service revenue.

Under the deal, about 28% of the outstanding Cellular shares will be bought for cash, with the remaining 72% exchanged for two series of newly issued AirTouch convertible preferred securities, the companies said.

"CCI's stockholders will have the opportunity to become AirTouch stockholders and participate in the rapid growth of AirTouch's domestic and international wireless ventures," George Blumenthal, chairman of New York-based Cellular Communications, said in a statement.

AirTouch said the purchase will bring its domestic customer base to 2.6 million. AirTouch also has operations in 11 nations in Europe and Asia such as Belgium, Germany, India, Japan and South Korea.

"The acquisition represents AirTouch's continued commitment to attractive opportunities in the cellular industry worldwide and extends the AirTouch brand name into one of the largest and fastest growing regional cellular systems in the country," AirTouch Chairman Sam Ginn said in a statement.

AirTouch has been in the process of combining its cellular operations with those of Colorado-based Baby Bell US West Inc. AirTouch also is an owner, along with Bell Atlantic Corp., Nynex Corp. and US West, of PCS PrimeCo, a personal communications service mobile phone venture.

In 1990, AirTouch bought a minority equity stake in Cellular and the right to acquire the rest of the company based on private market appraisals, which were scheduled to begin this August.

"There were a number of advantages to bringing this process to an early close," Sarin said. He said under terms of the original deal, the merger would have been an all-cash transaction and would have been fully taxable.

The stock of AirTouch closed Thursday down 62.5 cents at $29.625 on the New York Stock Exchange.

The Cellular acquisition is subject to regulatory and shareholder approval. It is expected to close by August.

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