Pacific Telesis Will Buy Dallas Cellular Firm : $431-Million Deal Opens 4 Out-of-State Markets
In a move that will extend its corporate reach across the country, San Francisco-based Pacific Telesis Group said Tuesday that it will buy Communications Industries, a Dallas-based radio-telephone company, in a cash merger valued at $431 million.
The deal calls for Communications Industries shareholders to receive $32.75 per share of common stock.
Last week, the Dallas company said a group of investors had offered to buy it for $396 million in cash and preferred stock, an offer apparently topped by Pacific Telesis.
Communications Industries holds Federal Communications Commission licenses to operate cellular radio-telephone networks in its home market of Dallas as well as in Atlanta, St. Louis and Tampa-St. Petersburg, Fla. Its licenses also include San Diego and San Francisco in Pacific Telesis’ home territory.
A Pacific Telesis subsidiary, Costa Mesa-based PacTel Mobile Access, last January bought a 23.5% interest in a cellular network to serve the San Francisco-San Jose area--a system in which CI also holds a 23.5% stake. The acquisition, if approved, thus would double Pacific’s interest.
Possible Divestiture
There is a catch, however. The FCC has decreed that each market must be served by two cellular radio-telephone systems--one run by phone companies, the other by any other company or combination of companies (the so-called non-wire-line network). Because PacTel Mobile Access is principal partner in the partnership that built Los Angeles’ telephone-company network and is building another to serve San Diego, Pacific Telesis may have to divest itself of the competing, non-wire-line license also serving the San Diego market.
PacTel’s interest in San Francisco is only in the non-wire-line license.
Because CI also manufactures radio-telephone and paging equipment, and Pacific Telesis is not allowed to manufacture equipment, some divestment of CI assets is likely, a Pacific spokesman said.
In a cellular network, a service area is divided into broadcast cells, each with its own low-powered radio transmitter and each connected by computer to the other cells and to the regular telephone network. As a user drives through, the computer switches the call from cell to cell. This allows several callers to use the same radio frequencies simultaneously, greatly increasing the system’s message volume beyond that of a single-transmitter mobile-phone system.
The CI-Pacific Telesis merger is subject to approval by CI’s shareholders, Pacific Telesis’ board, state regulatory agencies, the FCC, the Justice Department and the U.S. District Court supervising the breakup of the Bell System, which led to creation of Pacific Telesis in January, 1984.
