Verizon snaps up Cellular to reach rural masses

Verizon Wireless, America’s largest wireless company and largest wireless data provider, announced Monday it will acquire Rural Cellular Corp. for $757 million in cash, strengthening its position against its rival mobile-phone services providers.

Under the terms, Cellular shareholders will receive $45 a share, which is 16 percent more than the stock's average closing price of the last 10 days and 41% more than Rural Cellular's closing price of $31.88 on Friday.

Verizon’s all in cash transaction to purchase Cellular includes $757 million in cash and $1.9 billion in debt assumption, which places the total value of the deal at nearly $2.67 billion.

Alexandria, Minn.-based Rural Cellular operates in 15 states through its Unicel network, which has served 716,000 customers as of March 31 across its 15-state territory, including Maine, New Hampshire and Vermont.

The move would not only expand wireless company’s existence in rural areas but is expected to save Verizon a billion a year in roaming and other charges. The acquisition of Alexandria wireless firm Rural Cellular would give Verizon Wireless 716,000 more customers in Vermont and 14 other rural states.

On their recent move, Lowell McAdam, president and CEO of Verizon Wireless said, "The addition of Rural Cellular's markets will enable us to expand our services into areas where previously we had little or no presence."

Although, the two companies’ boards have unanimously approved the merger deal, but it still requires governmental and regulatory clearance and approval of Rural Cellular's shareholders. The deal is expected to close in the first half of 2008.

Verizon’s Cellular deal comes a month after its chief wireless rival, AT&T Inc. confirmed it would acquire larger rural wireless service provider Dobson Communications Corp. for $2.8 billion in cash.

San Antonio, Texas-based AT&T serves 63.7 million customers compared to the faster-growing Verizon’s 62.1 millions. The acquisition of Dobson, which currently serves 1.5 million customers, would likely strengthen AT&T’s position in the market, which already is the nation's largest mobile operator in terms of customers

Verizon shares slipped 43 cents, or 1 percent, to $41.57 in early trading, while Rural Cellular surged 34% to $42.70 in midday Monday trades.