American Tower to Buy Spectrasite for $3.1B

American Tower Corp. (AMT) plans to buy Spectrasite Inc. (SSI) for about $3.1 billion, extending its reach as the largest U.S. wireless and broadcast signal tower operator, the companies said on Wednesday.

Terms of the deal call for Spectrasite (search) shareholders to receive 3.575 American Tower (search) Class A shares for each Specrasite share they own, the companies said in a joint statement.

Based on American Tower's closing New York Stock Exchange price of $17.21 on Tuesday that values Spectrasite at $61.53 per share. That represents a premium of about 9.5 percent over Specrasite's closing NYSE price of $56.20.

American Tower expects to issue about 181.0 million shares in the tax-free transaction, after which its shareholders would own about 59 percent of the combined company, with SpectraSite shareholders holding 41 percent.

Subject to the approval of shareholders of both companies and regulators, the deal should close in the second half of 2005.

The combined company would own and operate about 22,600 communications sites, including more than 22,000 wireless towers and more than 400 broadcast towers, with operations generating more than $1 billion a year in revenue, the companies said. More than 20,000 of its tower sites will be in the Unites States.

The combination is expected to generate between $30 million and $35 million a year in cost savings.

It will also lower American Tower's overall leverage. Currently it has $3.1 billion in debt, while Specrasite has just $750 million. American Tower said the cash flow and strengthened balance sheet of the combined company will enhance its ability to reduce debt levels and return cash to shareholders.