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AT&T Wireless buys TeleCorp
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October 8, 2001: 11:07 a.m. ET
Stock deal is worth $2.4 billion and gives AT&T Wireless 900,000 new customers.
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NEW YORK (CNNmoney) - AT&T Wireless Services agreed Monday to buy the portion of TeleCorp PCS Inc. it doesn't already own in a $2.4 billion stock deal.
Under terms of the deal, TeleCorp shareholders are to receive 0.9 shares of AT&T Wireless stock for each of their shares. Based on Friday's closing price that represents a 44.5 percent premium for TeleCorp shares, although the companies' statement said the premium is only 19 percent based on the 30-day average price in the two stocks.
Shares of TeleCorp (TLCP: up $3.79 to $13.83, Research, Estimates) shot up 37 percent on the Nasdaq following the announcement.
Shares of AT&T Wireless (AWE: down $0.25 to $15.87, Research, Estimates) slipped 2.3 percent on The New York Stock Exchange.
Under terms of the deal, AT&T Wireless also would assume $2.1 billion of TeleCorp's debt, and $221 million in preferred securities. AT&T Wireless currently owns 23 percent of TeleCorp, which is its largest affiliate.
AT&T Wireless, which was spun-off from AT&T (T: up $0.18 to $19.05, Research, Estimates) earlier this year, is the No. 3 wireless phone provider behind Verizon Wireless and Cingular Wireless.
The companies' statements said the move would let AT&T Wireless roll out its branded services to 32 million more people across 14 states, including eight of the 50 largest markets and more than 900,000 existing TeleCorp customers.
"This is a strategically and financially attractive transaction for both companies," said a statement from AT&T Wireless CEO John Zeglis. "For AT&T Wireless, it makes good use of our equity while enabling us to maintain a strong balance sheet. TeleCorp shareowners will receive a fair premium and a good growth investment." 
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