Straight Path Communications Inc. said Thursday that it will sign today a merger agreement whereby Verizon Communications Inc. (NYSE: VZ) will acquire Straight Path for $184.00 per share -- reflecting a value of approximately $3.1 billion -- in an all-stock deal. Verizon will also pay a termination fee of $38 million to AT&T Inc. (NYSE: T) on behalf of Straight Path.
The transaction has been approved by the boards of directors of both Straight Path and Verizon. It will be subject to a nine-month review by the Federal Communications Commission (FCC) .
AT&T initially bid $1.6 billion for Straight Path on April 25. Verizon -- an unnamed bidder at that point -- topped that with a $1.8 billion bid. The Verizon bid was ramped up to $2.3 billion on May 3, and then $3.1 billion on May 8. AT&T had until Wednesday evening to beat that number, which evidently, was too rich for AT&T's blood. (See Straight Path Gets $3.1B Revised Bid From Unnamed Buyer and AT&T to Flash $1.6B for Straight Path 5G Spectrum.)
So why the billion-dollar bidding war over a relatively obscure spectrum holding company?
Straight Path holds fixed wireless licenses in the 39GHz band nationwide, and similar 28GHz licenses in cities like New York City and San Francisco. These two bands are expected to serve for the initial deployment of fixed wireless gigabit-speed 5G services in the US, as early as 2018. Mobile services will follow in the 2020 -- or so -- timeframe, although these have only been extensively tested on 28GHz in the US so far.
Verizon already acquired 28GHz licenses through its XO Communications Inc. buy. This acquisition will keep AT&T from having a widespread footprint of high-band spectrum with which to test and deploy 5G. Although Ma Bell did get some 39GHz spectrum in its recent Fiber Tower buy. (See Verizon Completes XO Fiber Buy; 5G Stage Set and AT&T Buys FiberTower for 5G Spectrum.)
The FCC has said that it will open up nearly 11GHz of high-band spectrum for 5G in the future. Exactly when this will happen, however, is not clear yet. Such "millimeter wave" auctions are not publicly scheduled, and the FCC is planning to handle the 3.5GHz CBRS auction first. (See Ready, Set, Go! FCC Votes for First 5G Spectrum.)
— Dan Jones, Mobile Editor, Light Reading