New York Investment Firm to Acquire Centennial Cellular

Centennial Cellular Corp. agreed on Thursday to be acquired by closely held investment company Welsh, Carson, Anderson & Stowe for $43.50 a share, or about $2 billion in cash and assumed debt, as losses at the rural wireless-phone company widened in the last year.

Centennial, which offers wireless phone and paging service in 10 states and Puerto Rico, had sought a buyer since April. The price is 13% more than Wednesday’s $38.38 close for Centennial Class A shares.

While AT&T; Corp. and other large phone companies have shied from less-populous regions because it takes longer to make them profitable, investment groups like Welsh Carson are attracted to rural areas’ growth and lack of competition. The groups are snatching up rural wireless companies, figuring that AT&T; and the Bells will seek them out in a few years to extend their reach.

In March, investor American Cellular Corp. agreed to buy PriCellular Corp. for $1.4 billion, just six months after Price Communications completed its $880-million acquisition of Palmer Wireless Inc. In February, Blackstone Group bought a majority stake in CommNet Cellular Inc. for $718 million.

New York-based Welsh Carson, which manages about $7 billion in assets, typically invests in computer, information and health-services companies, consolidates them and then sells them at a profit.

Welsh Carson will pay $43.50 in cash for each Class A and Class B share and assume about $515 million in debt, which it plans to refinance.

Class A holders have the right to retain a 7.1% stake in the company.

After the purchase, Centennial will continue to operate under the same management and name.

Centennial Class A shares rose $2.38 to close at $41 on Nasdaq.