Subject: [NEXTEL-1] Metrocall, Arch to merge

From: Marcelrf <[email-masked]>
Date: Mon, 29 Mar 2004 15:00:42 -0500

Metrocall, Arch to merge
March 29 13:14:00, 2004

ALEXANDRIA, Va.—It appears the consolidation of the paging and messaging
industry has come to a close as Metrocall Holdings Inc. and Arch
Wireless Inc.—the industry’s two remaining nationwide players—announced
plans to merge.
The deal, subject to approval from shareholders, antitrust regulators
and the Federal Communications Commission, is expected to be completed
in the second half of this year. The combined company will operate under
a new, as-yet-undecided brand, and its common stock is expected to be
listed on Nasdaq.

“While both Arch and Metrocall have created significant shareholder
value since having emerged from bankruptcy in 2002, the paging industry
continues to shrink due to considerable competitive pressure from new
cellular and PCS technologies,” said Ed Baker, Arch’s chairman,
president and chief executive officer. “The opportunity to consolidate
in the face of this pressure, to bring together the best of both
companies’ considerable management talent and to take advantage of
significant financial and operational synergies as well as to mitigate
execution risk in our respective stand-alone plans was a major factor in
our decision to move forward and recommend this transaction to our
shareholders.”

Metrocall’s President and CEO Vincent Kelly will serve as the head of
the new company, and will select the rest of the management for the
combined company. Metrocall and Arch will appoint equal numbers to the
new company’s board of directors.

The blockbuster merger is the culmination of years of consolidation
within the ailing paging and messaging industry, which has been
spiraling downward since the late 1990s. Indeed, according to those in
the industry, the number of paging and messaging subscribers has
dwindled from its high point of about 40 million in 1998 to as few as 10
million today. Over the course of the past several years, device
provider Motorola Inc. and infrastructure vendor Glenayre Technologies
Inc. have exited in the industry, while carriers like TSR Wireless have
shut down or, like WebLink Wireless, been acquired. Metrocall and Arch,
which have both shed debt through Chapter 11 bankruptcy proceedings, are
the last of the industry’s major players.
Under the terms of the merger, a new holding company will be formed to
own both Metrocall and Arch. Metrocall’s shareholders will receive $150
million in cash and 27.5 percent of the new combined company. Arch
shareholders will exchange their Arch stock for stock in the new
company, and will own 72.5 percent of the new company. The companies
said the cash generated by the newly combined company will be sufficient
to retire all of the debt incurred in connection with the transaction,
leaving enough cash for future dividends, stock repurchases or other
uses.

The companies said the structure of the deal, including the cash paid
out to Metrocall’s shareholders, will preserve the possibility of
retaining Arch's tax attributes. Thus, investor reaction to the deal was
mixed, as Arch’s stock shot up almost 30 percent to $31.01 per share
while Metrocall’s stock dropped about 10 percent to $67.75 per share.

http://rcrnews.com/cgi-bin/news.pl?newsId=17485
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