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The bidding war is over – and Verizon has won.

Straight Path on Thursday confirmed Verizon succeeded in prying the spectrum holding company from AT&T’s grasp with a bid that nearly doubled the latter’s original acquisition offer.

In a press release, Straight Path said it is terminating its $1.6 billion merger agreement with AT&T in favor of a $3.1 billion deal with Verizon. After several rounds of bidding, Verizon agreed to pay $184 per share for the company, coming in well above AT&T’s April offer of $95.63 per share.

The transaction has already been approved by the boards of both Straight Path and Verizon.

"Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G," Hans Vestberg, EVP and president of global network and technology at Verizon, said in a statement. "Combined with our recent transactions with Corning Incorporated, XO Communications, and Prysmian Group, this is another step to build the next-generation network for our customers."

Since it is exiting its original deal with AT&T, Straight Path will have to pay the carrier a $38 million termination fee. However, the company indicated Verizon has agreed to pick up the tab.

Straight Path said the $184 share price represents a 486 percent premium over the price of $31.41 for Straight Path stock as of closing on January 11, 2017. That date was one day prior to the day Straight Path announced its settlement with the FCC, which came with the condition that the company offload its spectrum holdings within the next year.

However, share prices for the company rose in recent weeks as the bidding war between AT&T and Verizon played out, and that $184 figure is significantly below the $233.79 closing price of Straight Path stock as of May 10. Share prices plunged as much as 20 percent in premarket trading Thursday on the news.

What Verizon will get for the money

The buy will net Verizon a massive trove of millimeter wave spectrum in the key 28 GHz and 39 GHz bands. Straight Path currently holds 735 millimeter wave licenses in those bands, which amount to an average of 620 MHz in the top 30 U.S. markets. The holdings represent about 95 percent of the commercially available 39 GHz spectrum licenses, CEO Davidi Jonas has said previously. Straight Path’s 28 GHz airwaves also blanket key markets like New York and San Francisco, he said.

The 28 GHz holdings will quite obviously complement the airwaves Verizon locked down in its recent XO deal, and Wells Fargo Senior Analyst Jennifer Fritzsche noted this spectrum is “a critical pillar in (Verizon’s) 5G strategy” and “dovetails off (Verizon’s) planned fiber spend.” But MoffettNathanson analysts recently pointed out that securing Straight Path’s 39 GHz holdings will also give Verizon leverage when the FCC moves to repackage the band into 200 MHz-wide channels.

“Legacy 39 GHz blocks are actually 50 MHz wide channels, following the outcome of the FCC’s Auction 30 in 2000 – far too narrow to be useful at frequencies this high … (but) the FCC’s recent rulemaking would repackage these 50 MHz-wide channels into 200 MHz-wide channels,” MoffettNathanson analysts observed. “There wouldn’t be much to see here otherwise, except for the fact that… well, Straight Path owns 34 percent of these licenses, and in many markets owns 600 MHz or more of the frequency to be repacked. In other words, he who owns Straight Path has all the leverage in working with the FCC to repackage the spectrum for an upcoming auction. And it goes without saying that should the auction be materially delayed, he who owns Straight Path will hold essentially all the usable 39 GHz licenses on the market.”

However, the firm noted the FCC will still have to approve the license transfer from Straight Path to Verizon, and could very well do so on the condition that Verizon agree to a repacking scheme that will make the rest of the 39 GHz band usable.

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