Omnipoint Corp. (Nasdaq: OMPT) soared 39 percent on Wednesday on news that VoiceStream Wireless Corp. (Nasdaq: VSTR) will buy the telecommunications provider in a $1.7 billion deal to create a national wireless powerhouse.
Omnipoint jumped 39 percent, up 8 1/8 to 28 15/16, in Thursday morning trading, while VoiceStream lost 13/16 to 28 11/16. Analyst Eric Weinstein with Donaldson Lufkin & Jenrette raised VoiceStream Wireless Corp. from "buy' to "top pick," following the news.
VoiceStream will exchange 0.825 of its shares, plus $8 in cash, for each share Omnipoint to extend its current western presence over Omnipoint's eastern domain. The Bellevue, Washington-based VoiceStream currently provides wireless communications services in cities such as Denver, Phoenix, Seattle, Salt Lake City, and Portland, Oregon. Bethesda, Maryland-based Omnipoint' s range includes New York, Philadelphia, of Boston, Miami, and Detroit.
The current value of $1.71 billion is based on 53.121 million outstanding shares of Omnipoint and VoiceStream's Wednesday closing price of $29.50 a share.
The combination of VoiceStream Wireless and Omnipoint will make the combined company one of the largest licensees in the world employing GSM, or global system for mobile communications, VoiceStream Chief Executive Officer John Stanton Stanton said in a statement. It would hold licenses to provide wireless service markets with a population of more than 175 million people including additional deals.
VoiceStream also announced a unit of Hutchison Telecommunications Ltd., a VoiceStream shareholder, would invest $957 million in the combined company, and VoiceStream will form a new joint venture with Cook Inlet Region Inc. to acquire licenses held by Omnipoint.
VoiceStream competes with Sprint Corp (NYSE: FON), Vodafone Group Plc. (NYSE: VOD) and Airtouch Communications Inc. (NYSE: ATI).