US telecommunications company AT&T Inc said late Friday it will buy rural wireless carrier Dobson Communications Corp, for $2.8 billion in cash to expand its reach in rural and suburban markets.
The deal comes a month after the top US rural wireless provider, Alltel Corp accepted a $25 billion take-over offer from TPG Capital and the buyout arm of Goldman Sachs, the largest private equity deal for the telecommunications industry.
Under Friday's deal, Dobson shareholders will receive $13 a share, a 16.9 percent premium over the company's closing price of $11.12 on Thursday.
Dobson markets wireless services under the Cellular One brand and has provided roaming services to AT&T and predecessor companies since 1990, AT&T said in a news release. Dobson has 1.7 million subscribers. The deal is subject to regulatory approval, but AT&T said that, due to the limited overlap of the two companies and substantial competition in the areas they overlap, it aims to get approval by the end of 2007.
AT&T said the deal will expand its geographic coverage. Dobson's network covers rural and suburban areas in Alaska, Arizona, Illinois, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, New York, Ohio, Oklahoma, Pennsylvania, Texas, Virginia, West Virginia and Wisconsin. Dobson will be merged into AT&T's wireless operations, which is led by Stan Sigman, president and chief executive officer of AT&T Mobility.
AT&T said the net present value of potential synergies were around $2.5 billion - generated by reduced roaming expenses and savings from overhead and operational costs.
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