Dobson’a acquisition was easy to spot

Last week on this same blog, I wrote about Dobson Communications Corp. exploring strategic options, including the sale of the company (see related story). It turned out that all comments on my review on Dobson were right on target. It was pretty obvious it was a happy story for everybody. We foresaw Dobson should sale the company for a considerable profit (especially in these market conditions), whereas any big wireless carrier that would buy them would gain additional cellular coverage without making huge capital investments.

Last Friday, AT&T Inc. agreed to purchase wireless carrier Dobson for approximately $2.8 billion in cash. The price represents a nearly 17% premium over Dobson's share price as of last Thursday. Including net debt as of the first quarter of 2007, the total transaction value is approximately $5.1 billion. Some Dobson investors were hoping for a strategic buyer such as AT&T to emerge, betting that such a company could manage a larger premium over Dobson's share price than a potential private-equity buyer.

AT&T seemed to be at the right place at the right time. Dobson offers access to markets where cellular penetration is not as high as in major metropolitan markets, thus leaving more room for future growth. And even though roaming partnerships with larger wireless carriers will be difficult to maintain, AT&T expects to save about $2.5 billion through overhead cuts and reduced "roaming" expenses.

In the past years, AT&T made several large deals that expanded its wireless and landline reach, such as the acquisitions of AT&T Wireless and BellSouth Corp. However, consolidation in the telecom industry has left AT&T and other large operators with fewer options for big acquisitions. But there are many small wireless and wireline carriers for them to chase. Some observer's on Wall Street have said a broader "roll-up" of such rural carriers could be in store.