Davel Communications to acquire Communications Central for 67% of revenues

Weekly Corporate Growth Report, Dec 1, 1997

The Deal: In a move that will create the nation's second largest independent payphone provider, Davel Communications has agreed to acquire Communications Central Inc. for $70 million Terms call for Davel to acquire all of Communications Central's outstanding stock for $10.50/ share in cash, and assume all of CCIX's outstanding debt Davel will finance the acquisition and refinance its existing debt with a recently signed $125 million credit facility it obtained through a syndicate of lenders.

Discussion: Davel has long been seen as the industry's premier independent operator of payphones and the deal will help it attain its goal of being the nation's largest as well. The acquisition will give Davel a strong network of over 20,000 payphones which will complement its existing route.

Since a majority of CCIX's payphones are located within Davel's existing markets, Davel expects to achieve cost savings, once the companies are fully integrated in the second year, exceeding $5 million annually. While the deal is expected to be neutral to analysts' earning estimates for Davel, the company anticipates that the benefits of the combination will make it accretive in the years thereafter Since Davel and CCIX also utilize compatible equipment, they will be able to reduce integration issues in combining the companies' payphone routes.

Davel operates a system of over 19,000 payphones in 27 states and the District of Columbia and provides long distance operator services to its pay telephones through its digitally switched long distance network CCIX operates over 20,000 payphones in 31 states and Washington DC