Verizon Wireless said Wednesday it will buy Price Communications Corp.'s (NYSE: PR) wireless subsidiary in a stock transaction worth more than $2.06 billion. The deal may be terminated if Verizon Wireless doesn't complete its IPO by Sept. 30, 2001.
Verizon Wireless is owned by Britain's Vodafone Group Plc (NYSE: VOD) and Verizon Communications (NYSE: VZ). Shares in those companies were down 0.5 to 37.81 and down 0.75 to 55, respectively. On Oct. 17, Verizon Wireless announced it would delay its initial public offering. The agreement to acquire Price Communications Wireless is expected to close shortly after the IPO. If it does not occur by Sept. 30, 2001, the agreement may be terminated by either party.
The $2.06 billion deal includes $550 million in debt, which Verizon will assume, as well as about $1.5 billion in stock based upon the price of Verizon Wireless stock at its IPO. This transaction is subject to FCC and shareholder approval. In addition, Price Communications, will retain other assets worth about $70 million.
Verizon Wireless will gain cellular systems covering 3.4 million POPs (point of service providers) in 16 markets in the Georgia, Alabama, South Carolina and Florida area.
Price Communications concurrently reported third quarter 2000 operating results with net earnings of $7.9 million or 14 cents a share for the quarter. The Company's EBITDA (earnings before interest, tax, depreciation and amortization) combined with other income, grew to $39.5 million for the third quarter.
Price Communications Wireless, its wholly-owned subsidiary, reported cash flow for the quarter ended Sept. 30 of $37.5 million compared with $35.1 million for the same quarter of 1999, an increase of 6.9 percent with an operating cash flow margin of 58.7 percent.