AT&T to Buy Centennial for $944 Million

According to NYT,AT&T announced Friday evening that it would buy Centennial Communications, a regional wireless phone company, for $944 million in cash, a price that is more than double Centennial’s stock market value.

AT&T is locked in a fierce battle with Verizon Wireless to dominate the nation’s cellphone service business. Verizon surged past AT&T as the dominant presence in the field by acquiring Alltel, the nation’s largest rural cellphone service provider, in June.

The company said the acquisition would give it an additional 1.1 million wireless customers. The deal would expand AT&T’s wireless coverage in largely rural areas of the Midwest and the Southeast, as well as in Puerto Rico and the Virgin Islands.

Under the terms of the deal, announced after the stock market closed, AT&T will pay Centennial stockholders $8.50 a share, a premium of 121 percent over Centennial’s closing price of $3.84. In after-hours trading, Centennial’s shares jumped to $7.90.AT&T will also assume Centennial’s debt, and it said the deal’s total enterprise value is approximately $2.8 billion.

AT&T said the private equity firm Welsh, Carson, Anderson & Stowe, Centennial’s largest stockholder, had agreed to support this deal.

In the first year after the transaction closes, AT&T said it expected minimal dilution to its earnings per share and cash flow as a result of upfront integration costs. It expects the deal to close by the end of the second quarter next year.

AT&T said the Centennial acquisition should improve its service for AT&T in parts of Indiana, Louisiana, Michigan, Mississippi, Ohio and Texas.

On Thursday, AT&T said it would buy Wayport, a privately owned provider of wireless Internet hotspots, for $275 million in cash.