New York investment firm to buy Centennial Cellular for $1.5 billion

Centennial Cellular will be folded into Welsh Carson’s CCW Acquisition Corp. following the merger, and will continue to operate as an independent company under its current name and management. In late morning trading Thursday, Centennial shares were up $2.5625 at $40.9375 on the Nasdaq Stock Market. The deal illustrates the recent trend of rural wireless carriers commanding hefty prices; earlier this year, PriCellular Corp. fetched 12 times projected 1999 cash flow from a newly formed investmentconcern, American Cellular Corp. Cable-TV concern Century Communications Corp., which holds 81.2% of Centennial Cellular’s Class B common stock, has agreed to tender its shares in the deal.

It will likely use its proceeds to purchase cable properties, a person familiar with the company has said. Specifics of the deal call for Centennial holders to exchange their Class A shares for either $43.50 in cash or 7.1% of the Class A shares of the surviving entity.

The cash alternative represents a 13.3% premium to Centennial’s price at the end of the day Wednesday of $38.375; the stock was halted in trading Thursday ahead of the announcement. Welsh Carson and Centennial Cellular said each of Centennial’s Class B common shares will be converted into the right to receive $43.50 cash and a number of Class A common shares, such that the aggregate number of Class A common shares held by Centennial’s existing shareholders equals 7.1% of the shares outstanding after the merger. Centennial Cellular’s convertiblepreferred shares will be converted into the right to receive $43.50 cash. Following the merger, investment partnerships affiliated with Welsh Carson will own 92.9% of Centennial Cellular’s shares outstanding. The partnerships will invest about $350 million of equity and $150 million of subordinated debt.

The merger requires the approval of Centennial Cellular’s shareholders and the Federal Communications Commission, the expiration of antitrust waiting periods and the funding of the committed financing arrangements.