Verizon Communications Inc. (NYSE, NASDAQ: VZ) said it agreed to acquire Straight Path Communications Inc. (NYSE MKT: STRP), which holds an extensive portfolio of 39 GHz and 28 GHz wireless spectrum licenses, for $184.00 per share, reflecting an enterprise value of $3.1 billion, in an all-stock deal.

The deal is supported by Straight Path’s majority shareholder Howard Jonas, founder of IDT Corp and Genie Energy, and is expected to close within nine months, subject to FCC review.

Based in Glen Allen, Va., Straight Path holds millimeter wave spectrum configured for 5G services, including 39 GHz licenses that serve the entire U.S. and 28 GHz assets in major markets.

Verizon will pay a termination fee of $38 million to AT&T Inc. (NYSE: T) on behalf of Straight Path, which will terminate its previously announced sale to AT&T.

Verizon’s acquisition price implies a premium of 486% to the closing price of Straight Path common stock of $31.41 on January 11, 2017, the day before Straight Path announced its FCC settlement and strategic alternatives process, and 404% premium to the closing stock price of $36.48 on April 7, 2017, the business day prior to entry into the AT&T merger agreement.

“It is a big premium for an obscure company called Straight Path Communications Inc. that has just nine employees and has yet to build out a network,” said The Wall Street Journal. “And it is another windfall for Mr. Jonas, who made a splash in 2000 by selling a stake in internet-calling company Net2Phone for more than $1.1 billion in cash to AT&T.”

“Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G,” said Hans Vestberg, executive vice president and president of global network and technology at Verizon. “Combined with our recent transactions with Corning Incorporated, XO Communications, and Prysmian Group, this is another step to build the next-generation network for our customers.”

Evercore served as exclusive financial advisor to Straight Path and Weil, Gotshal & Manges LLP served as company counsel on this transaction. Debevoise & Plimpton LLP served as counsel to Verizon on this transaction.

Photo: Howard Jonas, Founder of IDT Corp and Genie Energy. (BloombergTV)



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