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Brightpoint To Buy Most Of Rival CellStar

12/20/2006 10:03:00 AM Eastern

Plainfield, Ind. — Brightpoint, the U.S. market’s top cellular distributor, will further expand its U.S. and Latin American presence with the planned acquisition of rival CellStar’s U.S. operations and most of the company’s Latin American assets.

Brightpoint will pay CellStar $88 million in cash upon closing, which is expected in March or April.

The acquisition will boost Brightpoint top-line revenues by $450 million in the first year, president Mark Howell said. Brightpoint’s global revenues in 2005 were $2.1 billion.

Meantime, CellStar has entered into separate agreements to sell its Mexican operations, leaving the company only with its Chile operation.

Brightpoint president Mark Howell told TWICE that the acquisition will expand his company’s geographic presence in Latin America beyond its current presence in Columbia, give it a presence in the handset insurance-replacement business in the United States, give it some additional tier-two and tier-three carrier accounts in the United States and expand the company’s relationship with handset provider Motorola. Brightpoint will also gain efficiencies, acquire CellStar’s reverse-logistics customers and acquire relationships with CellStar’s portable GPS suppliers, Howell added.

“The board of directors of CellStar Corporation believes the divestiture of these operations at this time is in the best interest of our stockholders and we fully support the decision,” said Robert Kaiser, CellStar chairman and CEO. He added that he was “certain that as a result of this transaction, our customers will benefit from the enhanced capabilities, efficiencies and financial strength of the combined operations.”

In the past year, CellStar has been selling off operations to regain financial strength and in 2005 closed its Asia-Pacific operations. For the three quarters ending Aug. 31, 2006, the company reported net income of $5.8 million compared with a net loss of $21.3 million during the year-ago period. For the third quarter, CellStar reported consolidated net income of $1 million compared with a net loss of $7.6 million in 2005.

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