Shares of Centennial Communications dropped 15 percent yesterday amid market concerns that the firm's proposed $944 million acquisition by AT&T may hit some regulatory roadblocks. Analysts at investment advisory firm Stifel Nicolaus & Co. have said that they believe the merger will be approved, but that the terms may be reviewed.
The U.S. Department of Justice and the FCC are still scrutinizing the deal, which was announced Nov. 5. Under the terms of the transaction, AT&T is set to buy Centennial for $944 million, or $8.50 per share.
The combined company would control 40 percent of Puerto Rico's wireless market, which Stifel Nicolaus analysts say may prompt regulators to force AT&T to divest some assets. The Puerto Rican market is lucrative and accounts for about one-third of Centennial's revenue, which may cause AT&T to reduce it's offer. In addition, Stifel Nicolaus analysts said that they believe that the FCC could complete its review in the third quarter, but it could easily slip to October. Last week AT&T said that it expected the merger to close in third quarter.
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