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Shares of Straight Path Communications (NYSEMKT: STRP)were up 22.3% as of 2:20 p.m. EDT Wednesday afterthe wireless spectrum specialist released more details of an acquisition offer superior to AT&T's (NYSE: T) previous bid.
Straight Path shares initially skyrocketed 150% early last month, when the company agreed to be acquired by AT&T for $95.63 per share, or a total transaction value of $1.6 billion. But the stockcontinued to rise the following week amid reports that Verizon (NYSE: VZ) was weighing whether to top that bid in order to secure Straight Path's key wireless spectrum assets, which are expected to play a large role in enabling the rollouts of 5G wireless networks in the coming years. The week after that -- on April 25, 2017 -- Straight Path popped yet againafter it confirmed it had received an unsolicited "superior proposal" from an unnamed third party -- presumably Verizon -- on April 24, 2017. At the time, it gave AT&T five business days to negotiate an amendment to its own offer.
Today, however, Straight Path's board revealed that it has received a revised offer from the unnamed bidder to acquire 100% of its issued and outstanding shares in an all-stock transaction at $135.96 per share, representing an enterprise value of roughly $2.3 billion. Straight Path also noted that the previous (April 24) offer from this unnamed bidder was for $104.64 per share, or an enterprise value of $1.8 billion.
IMAGE SOURCE: GETTY IMAGES.
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The new bidder has stated that its offer is good through 11:59 p.m. EDT on May 8, 2017. So Straight Path is giving AT&T three business days to respond with its own competitive bid. As a reminder, if Straight Path chooses the new bidder, it will owe AT&T a termination fee of $38 million. But that's a small price to pay given the incredible premium represented by the latest proposal.
In the end, as I suggested last week, there's certainly a chance that Straight Path's price will go even higher. But with Straight Path shares trading at $153.85 as of this writing, I think investors would do well to take at least some of their profits off the table today.
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