VoiceStream Wireless Corp. of Bellevue, Wash., and Omnipoint Corp. of Bethesda said today that they will merge in a $1.7 billion deal that will create a wireless telecommunications powerhouse.
The merger combines VoiceStream's operations in the western United States with Omnipoint's presence in the East and Midwest.
Under the deal, VoiceStream will exchange 0.825 of its shares, plus $8 in cash, for each share of Omnipoint, the companies said. That puts the value of the deal at about $1.71 billion, based on 53.121 million outstanding shares of Omnipoint and VoiceStream's closing price today of $29.50 a share.
"The combination of VoiceStream Wireless and Omnipoint brings together two major providers of GSM in the United States, making the combined company one of the largest licensees in the world employing GSM technology," VoiceStream chief executive John Stanton said in a statement.
The combined company, along with a new Alaskan joint venture by VoiceStream and Cook Inlet Region Inc., would hold licenses to provide wireless service in 17 of the top 25 U.S. markets with a population of more than 175 million people, Stanton said.
VoiceStream provides wireless communications services in cities such as Denver, Phoenix, Seattle, Salt Lake City, and Portland, Ore. Omnipoint provides service to cities including New York, Philadelphia, Boston, Miami and Detroit.