Alaska Communications chooses new buyer, ATN International

Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) says that the bidding war started when it announced an agreement November 3, 2020, to be acquired by a combination of Macquarie Capital and GCM Grosvenor has ended with the company being sold to someone else. A newly formed entity owned by ATN International, Inc. (NASDAQ: ATNI) and financial partner Freedom 3 Capital, LLC, now will buy the company for approximately $332 million, including net debt. The new price is about $22 million more than Macquarie Capital and GCM Grosvenor had offered in November.

The newly created affiliate of ATN will pay $3.40 in cash for each of the total outstanding shares of Alaska Communications common stock. The agreed-upon price is a premium of approximately 78% over the closing per share price of $1.91 on November 2, 2020, the last trading day prior to the date on which the original agreement was executed. The new purchase price also is a 70% premium to the 30-day volume weighted average price up to and including November 2.

The deal with ATN follows several rounds of bidding kicked off by a “go shop” period Alaska Communications’ board was allowed to pursue under the original agreement, which called for Macquarie/GCM to pay $3.00 per share. That exercise resulted in a pair of bids from other interested parties, one of which was deemed a superior proposal of $3.15 per share and the other described as having similar potential. Macquarie/GCM agreed to raise their bid to $3.20 per share (see “Alaska Communications uses third-party interest to get better merger deal”), but one of the third parties (which was not identified as ATN at the time) countered with a bid of $3.25. Macquarie/GCM in turn topped that counter by a penny per share per share on December 22, and ATM responded with what proved to be the winning bid. At least some of that money likely went to the $6.8 million breakup fee Alaska Communications had to pay Macquarie and GCM. With that fee paid, it appears the original suitors have stepped aside for good.

"Today's announcement is the product of a comprehensive process that demonstrates what a strong business the team at Alaska Communications has built. The agreement with ATN is a great result for our stockholders, who will receive significant near-term value," said David W. Karp, chairman of the Alaska Communications Board of Directors.

"This transaction represents an exciting opportunity to augment our market position, as well as expand our capabilities to better serve our customers,” added Bill Bishop, president and CEO of Alaska Communications. “ATN has extensive telecommunications expertise, a strong track record of successfully investing in and operating capital-intensive businesses, and has a strong financial position highlighted by its net cash position. These are critical attributes that will support our strategy to deliver superior customer service utilizing our fiber-based network solutions. We firmly believe this transaction will allow us to enhance our expanded fiber network services and drive long-term value for our employees and customers in Alaska."

“This investment and merger allow us to enter a new market with many similar characteristics to our existing operations in the U.S. and elsewhere. Further, it aligns with our strategy to leverage the broad capabilities of our operating platform to enhance and augment leading providers of facilities-based communications services in distinctive markets,” commented Michael Prior, chairman and CEO of ATN. “ATN has a long history of enabling its subsidiaries to gain and maintain strong market positions by investing in high-quality infrastructure, the latest technologies, and creative solutions to give customers a superior experience. We recognize the same determination and customer-centric approach in the Alaska Communications team.

“Our industry is rapidly changing, and communications requirements have never been more essential and critical than they are today. We look forward to combining our resources and experience with Alaska Communications’ market knowledge and reputation for superior service to provide industry-leading communications products and services to customers in Alaska and beyond,” Prior concluded.

The purchase remains subject to the approval of Alaska Communications' stockholders, regulatory approvals, and other customary closing conditions. ATN says the merger has fully committed debt and equity financing and is not subject to any condition with regard to financing. TAR Holdings, LLC, which owns approximately 8.8% of the outstanding shares of Alaska Communications common stock, has agreed to vote in favor of the merger.

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