TheDeal: Goodman Networks Buys Multiband

NEW YORK ( TheStreet) -- Goodman Networks Inc., which provides engineering services to the telecommunications sector, said Wednesday, May 22, that it agreed to acquire Multiband Corp. ( MBND) for about $116 million in cash.

Plano, Texas-based based Goodman, which is family owned, is going to pay Multiband $3.25 per share, valuing the target's equity at around $70 million. The buyer is also going to assume Multiband's debt and redeem its preferred stock.

The purchase price represents a 26% premium over Multiband's Tuesday closing stock price of $2.58.

The news sent Multiband's stock up 24% to $3.20 on Wednesday afternoon.

Minneapolis-based Multiband, founded in 1975, provides installation services to satellite and cable providers. The company generates the majority of its revenue by completing about 20% of installations for DirecTV Group Inc.

Multiband generated a 2012 revenue of $305.6 million compared to $300 million in 2011. The company operates 37 offices across 19 states.

A Goodman spokesman said Wednesday that the acquisition will diversify the company's services into the cable and satellite sectors.

Multiband got involved installing video services in single-family homes in 2008, when it acquired a 51% stake in Michigan Microtech Inc. from DirecTech Holding Co., a DirecTV fulfillment agent.

In July 2012, Multiband reached a deal to acquire rival MDU Communications International Inc. for $42.6 million, but that deal was never completed. Multiband called it off as a result of the Goodman acquisition, according to a filing with the Securities and Exchange Commission.

Multiband has a 45-day go-shop period and will have to pay Goodman a breakup fee of up to $6 million if it agrees to another offer.

Multiband said Wednesday that it considered a number of options before it agreed to be acquired by Goodman.

After the deal is completed, Multiband will become a wholly owned subsidiary of Goodman and will continue to be led by CEO James Mandel.

The transaction is expected to close in the third quarter, pending shareholder and regulatory approval. It is not subject to financing conditions.

Craig-Hallum Capital Group LLC and Winthrop & Weinstine PA advised Multiband.

Jefferies LLC, Credit Suisse (USA) Inc. and Haynes and Boone LLP advised Goodman.

Multiband did not return calls Wednesday.

-- Written by Demitri Diakantonis in New York