Crown Castle Adds a Jewel

A $4 billion Global Signal deal creates a wireless tower giant.
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Crown Castle

(CCI) - Get Report

agreed to acquire

Global Signal

(GSL) - Get Report

for $4 billion in cash and stock, creating a wireless tower giant.

Houston-based Crown Castle said the combined company will have over 24,000 wireless sites and 16,240 towers in the top 100 basic trading areas -- the most of any tower company.

"We expect this extraordinary combination of companies with the most towers in the best markets to create significant value for our customers and shareholders," said Crown Castle chief John P. Kelly. "The complementary nature of our U.S. portfolios will result in a high-quality, diversified customer base, with 76% of site rental revenues from the four largest U.S. wireless carriers."

The merger is expected to generate cost synergies of between $12 million and $15 million annually, which are expected to be realized within 12 months after closing.

Global Signal holders will get 1.61 Crown Castle shares or $55.95 in cash for each Global Signal share they hold. Crown Castle will pay as much as $550 million in cash in the deal and the rest in stock.

The agreement gives Global Signal holders a 12% premium to Thursday's closing prices.

Three Global Signal directors will join the Crown Castle board, boosting board membership to 13. Kelly and Crown Castle financial chief Ben Moreland will stay in their jobs in the combined company.

Global Signal's three largest shareholders, Fortress Investment Funds, Greenhill Capital Partners and Abrams Capital, have agreed to vote shares representing approximately 40% of Global Signal's outstanding shares in favor of the Crown Castle transaction.

Crown Castle expects to finance the cash portion of the transaction through its existing senior secured credit facility, including a funded revolving credit facility in the amount of $250 million and an add-on to Crown Castle's existing senior secured term loan of $300 million.

Crown Castle will also assume estimated debt of $1.8 billion. At the closing of the acquisition, Crown Castle expects to have total debt of approximately $5.4 billion and net debt of approximately $5.3 billion.

The merger is expected to close in the first quarter of 2007.