Citizens to Buy Land-Line Firm

CITIZENS TO BUY LAND-LINE FIRM
[SOURCE: Wall Street Journal, AUTHOR: Dennis K. Berman dennis.berman@wsj.com]
Citizens, of Stamford, Conn., will pay $41.72 a share for Commonwealth Telephone Enterprises, of Dallas, Pa., with $31.31 of it in cash and the rest in shares tied to a ratio of Citizens' current stock price. The deal values the company's shares outstanding at about $908 million. The final purchase price would include an additional $313 million in debt that will be converted to equity as part of the transaction. Giant phone companies such as Verizon Communications Inc. and AT&T Inc. are increasingly focusing on wireless, leaving the typical land-line business to a group of smaller operators. These companies, in turn, are grabbing markets that the giants are either exiting from or for which they have little concern. Over the long term, it is conceivable to see the formation of a few massive horizontally integrated local phone carriers, which would stretch across the nation and would comprise the bulk of the copper-based local phone lines. It may take years for that to happen, but deals such as this one are part of that evolution. In the meantime, these rural carriers have focused on delivering investors consistent dividends amid a decline in use of local land lines.
http://online.wsj.com/article/SB115854930926766036.html?mod=todays_us_page_one
(requires subscription)