Article Abstract:
Sprint Corp has reached an agreement to acquire Centel Corp for $3 billion in Sprint stock, creating the first telecommunications corporation since the break-up of AT and T to have the capability to supply essentially all types of telephone service. Further, the resulting entity would not be subject to the jurisdiction of Federal Judge Harold Greene, who instigated the AT and T break-up, leaving it free to enter areas closed to the regional Bell companies, including equipment manufacturing. The merged firm would have combined assets of nearly $14 billion, making it larger than MCI Communications, the nation's current number two supplier of long distance services, and about the size of any of the regional Bells. William T. Esrey, chairman and CEO of Sprint, will serve as chairman and CEO of the new entity, while Centel Chmn and CEO John P. Frazee, Jr. will serve as president and chief operating officer. The financial terms of the deal are expected to disappoint Centel stockholders, but Frazee plans to stress tax advantages to the deal when explaining an apparent loss of $1 billion in value.
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Article Abstract:
Institutional investors, furious at the $1 billion gap between the $4 billion they believe Centel Corp to be worth and the $3 billion offered by Sprint Corp, could put a stop to a proposed merger between the two firms that would create the most diversified telecommunications company since the break-up of AT and T. Institutional stockholders account for some 60 percent of Centel's stock, and a large majority of those shares are needed for approval of a pooling-of-interests deal such as that proposed for Sprint and Centel. Announcement of the proposal triggered a $10.50 per share drop in Centel stock and a $1.375 per share drop in Sprint stock. Centel shareholders were particularly disturbed to learn that, far from receiving a premium for their shares, they might actually lose money in the deal. An executive for one institutional stockholder was quoted as saying that no deal at all would be preferable to the Sprint proposal, but spokesmen for both Sprint and Centel maintain that investor ire will be mollified once it is understood that no other company is willing to outbid Sprint.
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Article Abstract:
Rochester Telephone Corp agrees to buy local phone operations in Minnesota and Iowa for $100 million in cash, 2.8 million shares of Rochester Telephone stock, and the Rochester company's minority investments in cellular franchises in 20 cities and towns, from Centel Corp. The stock is currently valued at about $82.2 million, and the minority stakes are estimated to be worth about $67 million, so that the entire deal has a value of about $250 million. The deal is expected to close by the middle of 1991.
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