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Verizon Ropes Rural Cellular

As noted earlier, Verizon Wireless has stumped up a total of $2.7 billion for Rural Cellular Corp. (Nasdaq: RCCC) to build out its coverage in the countryside. The buyout is the latest buyout of a smaller rural operator by a larger carrier this year, reflecting the latest consolidation trend in the U.S. market.

Verizon is paying out $757 million in cash and taking on Rural Cellular's debt, which bumps the value of the deal up to around $2.67 billion in total. Rural's shareholders get $45 a share.

Rural Cellular's networks are located in Maine, Vermont, New Hampshire, New York, Massachusetts, Alabama, Mississippi, Minnesota, North Dakota, South Dakota, Wisconsin, Kansas, Idaho, Washington, and Oregon. It operates both CDMA and GSM networks for its 716,000-odd customers.

Verizon says that the deal will increase its customer base and coverage in rural markets.

Verizon's deal is the latest cherry-picking of a rural carrier by a larger operator. Last month, AT&T Inc. (NYSE: T) bought Dobson Communications, the third largest local operator in the U.S. Private equity has also got its fingers in the rural pie with TPG Capital and GS Capital Partners making a $27.5 billion play for Alltel Corp. (NYSE: AT). (See AT&T to Buy Dobson for $5.1B and Alltel Accepts $27.5B Buyout Offer.)

Remaining rural operators like Suncom Wireless saw their shares rise on the M&A news. Suncom was up 44 cents (1.91 percent) to $23.50 in afternoon trading.

— Dan Jones, Site Editor, Unstrung

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