Centennial 100% Premium Buyout Could Ignite Sector (CYCL, T)

Centennial Communications Corp. (NASDAQ: CYCL) will be trading up huge on a $944 million buyout from AT&T Inc. (NYSE: T).  This was a 100% premium-merger, and you have to wonder if the larger telecom giants still have an appetite to consolidate the players if it means they can grow their footprint.

Centennial is being bought to improve wireless coverage for customersin rural areas of the Midwest and Gulf Coast, Puerto Rico, and the U.S.Virgin Islands. Centennial’s 9 million NetPops include the Midwestregion of Indiana, Michigan, and Ohio; and Southeast cluster includedparts of Louisiana, Mississippi, and Texas.

As of May 31, Centennial had 1,092,600 wireless subscribers,and it operated 139 retail outlets in the  United States and 77 retailoutlets in Puerto Rico.  The $944 million comes to $8.50 per share incash for Centennial holders.  It also assigns a per-customer cash valuefor the newest wireless telecom merger as being close to $860.00 beforebacking out the per-customer value for retail locations.

A 100%-premium is hard to not notice, even for a deal this small compared to AT&T’s $159 billion market cap.

Jon C. Ogg
November 10, 2008