NEW YORK (CNNfn) - In a sign of rebounding vibrance in the cellular phone industry, American Cellular Corp. agreed Monday to pay $811 million and assume $600 million in debt to acquire PriCellular Corp.
American Cellular will pay $14 per share for the White Plains, N.Y.-based PriCellular, whose shares (PC) closed at $13 Friday.
PriCellular has made a name for itself by focusing on rural and less-desired markets. This strategy of picking up smaller cell phone systems has resulted in strong growth. It currently has 5.1 million potential subscribers in nine states, including Minnesota, Wisconsin, Ohio, Pennsylvania, New York, Kentucky, Michigan, West Virginia and Tennessee.
PriCellular operates under the CellularOne service mark, which American Cellular will use after the deal is closed.
American Cellular was recently formed by MLC Industries along with a financial consortium including Spectrum Equity Investors, Providence Equity Partners and Sandler Capital Management.
Privately held MLC Industries is led by Brian McTernan and John Fujii, two experienced cellular veterans who helped form the privately held company in 1987. McTernan and Fujii will serve as co-presidents of the combined company.
McTernan said few changes are planned for PriCellular. "We believe that PriCellular is very well-managed and well-positioned to take advantage of the rapidly growing rural cellular market.
"PriCellular has put together an unusually attractive group of rural cellular systems that have substantial internal growth prospects. We intend to use these systems as a platform for future cellular acquisitions."
American Cellular's acquisition of PriCellular is indicative of a rebound of interest in cell phone firms, with a new breed of companies focusing on the rural and less-competitive markets.