8-KMaterial AgreementsOther EventsExhibits & Filings

AT&T INC. 8-K Report, Material Agreement (Jul 12, 2013)

Filed July 12, 2013For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. announced on July 12, 2013, its entry into a definitive Agreement and Plan of Merger to acquire Leap Wireless International, Inc. for a total transaction value of approximately $4 billion, including debt. The proposed acquisition aims to significantly bolster AT&T's spectrum holdings and expand its LTE network coverage, particularly in areas where Leap operates. The deal involves a cash payment of $15.00 per share to Leap stockholders, plus a non-transferable contingent value right (CVR) tied to the future sale of a specific FCC license. The transaction is subject to customary closing conditions, including regulatory approvals from the FCC and state public utility commissions, as well as adoption by Leap stockholders. AT&T has committed to using its best efforts to obtain these approvals, though it is not obligated to agree to divestitures that would have a material adverse effect on its business. Leap's largest shareholder, MHR Fund Management, representing approximately 29.8% of the stock, has agreed to vote in favor of the merger, providing significant support for the deal's approval.

Key Highlights

  • 1AT&T to acquire Leap Wireless International, Inc. for $15.00 cash per share plus a contingent value right (CVR).
  • 2The acquisition is valued at approximately $4 billion, including debt, and aims to expand AT&T's spectrum and LTE coverage.
  • 3Leap stockholders will receive a CVR for a pro rata share of the net proceeds from the future sale of a specific FCC license (WQJQ707).
  • 4The deal requires approval from Leap stockholders and regulatory bodies, including the FCC and state public utility commissions.
  • 5MHR Fund Management, holding 29.8% of Leap's shares, has agreed to vote in favor of the merger.
  • 6Termination fees are outlined, with Leap potentially paying AT&T significant amounts under specific circumstances, such as a change in recommendation or failure to secure stockholder approval after a superior proposal.
  • 7AT&T has the right to terminate the agreement if Leap's Board changes its recommendation against the merger.

Frequently Asked Questions

The acquisition is primarily driven by AT&T's goal to significantly enhance its spectrum holdings and expand its LTE network coverage. Leap Wireless operates in markets that complement AT&T's existing footprint, allowing for a more robust and widespread LTE service, especially in underserved areas.

The CVR is a right attached to each share of Leap common stock, entitling the holder to a pro rata share of the net proceeds from the future sale of a specific FCC license (WQJQ707) held by Leap. This means Leap stockholders could receive additional value if this license is sold at a favorable price after the merger closes, after deducting certain expenses and taxes.

The merger is subject to several conditions, including the affirmative vote of Leap stockholders to adopt the merger agreement, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, approval from the Federal Communications Commission (FCC), and approvals from applicable state public utility commissions. AT&T will not be required to agree to significant divestitures to obtain these approvals.

If regulatory approvals are not obtained by a certain date (July 11, 2014, with possible extensions), either party can terminate the agreement. Leap may be required to pay a termination fee to AT&T under specific circumstances, such as if Leap's Board changes its recommendation to support another acquisition proposal. AT&T also has the right to terminate if Leap's Board changes its recommendation.