TeleCorp acquired by AT&T

AT&T Wireless is to acquire TeleCorp PCS in an all-stock transaction valued at $4.7 billion.

AT&T Wireless will acquire the 77% of the company it does not already own for $2.4 billion and assume $2.1 billion in net debt and approximately $221 million in preferred securities. The boards of directors of both companies have approved the transaction and TeleCorp PCS shareowners representing a majority of the voting power have committed to vote in favour of the acquisition.

AT&T Wireless said it will offer TeleCorp PCS shareowners 0.9 shares of AT&T Wireless common stock for each share of TeleCorp PCS common stock. This represents a premium of 19 percent based on the average of the closing prices for the past 30 trading days for TeleCorp PCS common stock.

AT&T Wireless, which currently owns 23 percent of TeleCorp PCS, will issue approximately 146 million additional common shares to acquire the remaining outstanding TeleCorp PCS common shares.

Following the close of the acquisition, AT&T Wireless would have approximately 2.68 billion common shares outstanding. The transaction is structured to be tax-free to TeleCorp PCS shareowners.

Both companies said they expect the transaction to close in the first half of 2002, following approval from Telecorp PCS shareowners and approvals from the US Federal Communications Commission and Department of Justice. The companies do not anticipate significant regulatory issues given that the proposed transaction will result in a minimal overlap of markets.

AT&T Wireless will be adding markets covering a population of about 32 million in 14 states – primarily in the Southeast and Midwest including such markets as New Orleans, Nashville, Memphis and Louisville – as well as the commonwealth of Puerto Rico.

The company said it will be paying approximately $154 per licensed POP or $180 per covered POP. This compares favourably to AT&T Wireless’ current valuation of $182 per licensed POP and $237 per covered POP.