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Vodafone snags CommNet
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July 19, 1999: 11:10 a.m. ET
Merger valued at $1.36B in cash, debt to expand cellular reach in Western U.S.
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LONDON (CNNfn) - Anglo-American cellular phone operator Vodafone AirTouch agreed Monday to buy CommNet Cellular, a manager of mobile networks in nine Western U.S. states, for $1.36 billion. The price includes $600 million in assumed debt.
Vodafone Airtouch (VOD), created through the merger earlier this year of Britain's Vodaphone Group and Airtouch Communications of the United States, will pay $764 million in cash for CommNet, majority-owned by a private equity fund of the Blackstone Group investment bank.
The deal is being undertaken by Airtouch Cellular, a wholly owned subsidiary of Vodaphone Airtouch with 28 million mobile customers in 23 countries.
The deal, slated to close in four to five months, will add strategic new territories to Airtouch's coverage area in the Western United States. CommNet provides cellular service in most of Colorado, Montana, North and South Dakota, Utah and Wyoming and parts of Idaho, Iowa and New Mexico.
With 360,000 subscribers, the company drew nearly one-third of its $171.4 million in revenue last year from so-called "roaming" charges. Those are charges levied by CommNet on subscribers to other cellular providers when they make and receive calls on its systems.
"CommNet's markets are well-managed and fit ours like a hand in a glove," Vodafone's chief executive officer, Chris Gent, said in a statement.
Gent added: "(The deal) will cut our roaming costs and offer significant marketing synergies, which will enable us to improve the value we offer customers."
Under terms of the deal, CommNet shareholders will receive $31 a share in cash, plus 8 percent annual interest from July 18 until the closing of the deal.
CommNet is majority owned by Blackstone Capital Partners, a private equity fund of Blackstone Group.
Vodafone Airtouch shares were up 1.18 percent at 1,374 pence Monday afternoon in London.
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