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AT&T to buy Straight Path in deal valued at $1.6B

AT&T Inc. struck a deal to buy Straight Path Communications Inc. for $95.63 per share in an all-stock merger intended to qualify as a tax-free reorganization.

The transaction has a total value of $1.6 billion, including liabilities and amounts to be remitted to the FCC under the terms of Straight Path's January consent decree. Straight Path shareholders will receive $1.25 billion, which will be paid using AT&T stock, the companies said April 10.

The acquisition of Straight Path, which holds a portfolio of millimeter wave spectrum, including 39 GHz and 28 GHz licenses, is expected to help AT&T develop 5G technologies. This acquisition complements AT&T's January acquisition of FiberTower.

The transaction, which has been approved by the boards of both companies, is expected to close within 12 months, subject to FCC review. The transaction is supported by Straight Path's majority shareholder, Howard Jonas, who has inked a voting agreement with AT&T and agreed to vote his class A shares in support of the transaction, subject to certain limitations.

The acquisition of Straight Path for $95.63 per share in AT&T stock, implies a premium of 204% to the closing price of Straight Path common stock of $31.41 on Jan. 11, the day before Straight Path announced its FCC settlement and strategic alternatives process, and 162% premium to the closing stock price of $36.48 on April 7.

AT&T will buy 735 mmWave licenses in the 39 GHz band and 133 licenses in the 28 GHz band. These licenses cover the entire U.S., including all of the top 40 markets.

Evercore served as the exclusive financial adviser to Straight Path and Weil Gotshal & Manges LLP served as company counsel on this transaction.