Arch Reaches Agreement to Buy MobileMedia

Arch Communications Group Inc. said it reached an agreement to acquire MobileMedia Corp. for as much as $546 million in cash, stock and assumed debt in a move that would get MobileMedia out of bankruptcy and create the nation’s second-largest paging company. The transaction would result in MobileMedia’s unsecured creditors getting a majority stake in the combined company. Under the agreement, Arch will sell $262 million in debt, using the proceeds to pay MobileMedia secured creditors, and will assume $60 million in MobileMedia liabilities. Arch also will issue to MobileMedia’s unsecured creditors shares and rights to buy 48.4 million to 57.7 million shares, valued at $187.6 million to $223.6 million based on Wednesday’s closing price. Fort Lee, N.J.-based MobileMedia, which filed for bankruptcy court protection last year, has struggled as paging competition has increased and prices have fallen. Westborough, Mass.-based Arch is betting size will help it compete better against existing paging rivals as well as wireless phone companies that also offer paging service. The acquisition would be subject to approval by Arch shareholders, the bankruptcy court and the Federal Communications Commission. Arch shares rose 25 cents to close at $4.13 on Nasdaq.