Straight Path accepts $3.1 billion deal with Verizon

Published May 11, 2017 by Robert Powell, III

Straight Path Communications Inc. has accepted a $3.1 billion bid from Verizon Communications Inc., ending a bidding war with AT&T for the Glen Allen-based company.

Straight Path holds a portfolio of millimeter-wave (mmWave) spectrum, airwaves considered highly important in the developmentof fifth-generation (5G) wireless services..

Verizon's offer is worth $184 a share, more than $147 above the price that Straight Path's stock was trading before it announced a merger deal with AT&T.

As part of its deal with Straight Path, Verizon will pay a termination fee of $38 million to AT&T.

Straight Path had accepted a $1.6 billion offer from AT&T on April 9. In accepting Verizon's offer, Straight Path said AT&T would not make any new bid to acquire it.

At $184 a share, the all-stock Verizon deal represents a premium of 486 percent when compared to Straight Path’s closing price of $31.41 on Jan. 11, the day before the company announced a settlement with the Federal Communications Commission.

In a consent decree, the FCC fined Straight Path more than $100 million to resolve an investigation of the company’s failure to deploy wireless services as required under spectrum licenses.

The Verizon offer  also represents a 404 percent premium compared to the company’s closing price of $36.48 on April 7, the business day before Straight Path’s AT&T merger agreement was announced.

The Verizon deal has been approved by the boards of directors of both companies. The transaction also is supported by Straight Path's majority shareholder, Howard Jonas. He has entered into a voting agreement with Verizon and agreed to vote his Class A shares (held through a trust) in support of the deal.

The companies anticipate a closing within nine months, subject to FCC review.

Straight Path holds an extensive portfolio of 39 GHz and 28 GHz wireless spectrum licenses. The company is developing wireless technology through its Straight Path Ventures subsidiary.