Summary
- The management team at American Tower just announced a significant asset acquisition.
- This move, based on the terms, was a wise decision by management, allowing the company to benefit from added cash flows.
- Because of the multiple captured on these assets, there should be additional upside to the firm on the whole.
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In its search for growth opportunities, the management team at American Tower (AMT) reached a deal wherein it will acquire some assets overseas in an all-cash transaction. This move, based on what information management has provided, looks like a wise decision by the firm, especially when stacked against the value of American Tower itself. As management makes additional incremental transactions in the future, and assuming the terms are similar in nature to these terms, investors should revel because, keeping all else the same, these transactions should only create value for the company and its shareholders in the long run.
A look at the transaction
According to a press release issued by the management team at American Tower, the company has reached a deal wherein it is acquiring assets in exchange for $1.85 billion. This is inclusive of $0.2 billion worth of debt assumed, net of cash included in the deal. These assets collectively consist of around 5,500 sites spread throughout Ghana, Uganda, Kenya, Burkina Faso, and Niger. According to management, around 90% of the revenue tied to these assets comes from Tier-1 wireless operators and around half of revenue comes from sources that either pay using the US dollar or whose currencies are pegged to the euro. This provides some degree of stability to protect against foreign currency fluctuations.
