ATN To Take Alaska Private In $332M Deal; Raymond James Sticks To Buy

Shares of ATN International closed 6.7% higher on Monday after the telecommunications giant announced the takeover of Alaska Communications Systems in a cash deal worth $332 million, including net debt. Meanwhile, Alaska stock closed 10.6% lower on the day.

Per the deal terms, ATN (ATNI) along with its financial partner Freedom 3 Capital, LLC will form a new entity to buy all the outstanding shares of Alaska for $3.40 per share in cash.

The deal has been approved by Alaska’s (ALSK) board but is still awaiting the approval of its shareholders and other regulatory approvals. Following the deal, which is likely to close in the second half of 2021, Alaska will become a privately-held company.

ATN’s CEO Michael Prior said, “This investment and merger allows us to enter a new market with many similar characteristics to our existing operations in the U.S. and elsewhere. Further, it aligns with our strategy to leverage the broad capabilities of our operating platform to enhance and augment leading providers of facilities-based communications services in distinctive markets.” (See ATNI stock analysis on TipRanks).

Following the deal announcement, Raymond James analyst Ric Prentiss maintained a Buy rating on the stock.

Prentiss said that “we previously worried about potential issues with travel and tourism (and the associated impact on the hospitality industry and its employees) impacting the INT’L (international) segment, the essential nature of the business has helped as well as having operations in the Islands (Bermuda, Cayman Islands, and the USVI [U.S. Virgin Islands]).”

Meanwhile, the Street has a cautiously optimistic outlook with an analyst consensus of a Moderate Buy based on 2 unanimous Buys. The average analyst price target stands at $64, which implies upside potential of about 43.6% to current levels. Shares have declined 19.5% over the past year.