Winding road

9 May 2017 By Robert Cyran Follow @rob_cyran

Verizon trumped AT&T with a $2.3 bln bid for Straight Path, an owner of spectrum touted for 5G wireless service. The original 200 pct premium is now 400 pct. Many investors clearly underappreciated the security’s value. There’s a decent chance suitors are now overestimating it.

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Straight Path Communications, an owner of wireless spectrum, said on May 8 that an unnamed “multinational telecommunications company” had raised its takeover bid to $184 a share, or about $2.3 billion. The unnamed company is Verizon Communications, according to Reuters, citing unnamed sources. Straight Path shares were trading around $223 apiece on May 9.

The revised offer exceeds an agreed deal with AT&T, announced last month at $95.63 a share, or $1.25 billion. Straight Path said the unnamed bidder would cover the $38 million termination fee required to pay AT&T if it accepted a rival offer.

Straight Path shares closed at $36.48 per share on April 7, the last trading day before AT&T’s offer was made public.

In January, Straight Path signed a settlement with the Federal Communications Commission following an investigation into the company’s failure to deploy wireless services as agreed under its spectrum licenses. Straight Path agreed to pay a $15 million fine, surrender 196 of its licenses, sell the remainder of its portfolio and remit 20 percent of the proceeds to the U.S. Treasury.

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Straight Path shares closed at $36.48 per share on April 7, the last trading day before AT&T’s offer was made public.

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