US Cellular, Telephone and Data surge after strategic review announcement (update)
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Update 3:25pm: Updates shares, adds Morgan Stanley comment.
US Cellular (NYSE:USM) jumped 93% after the company announced it was exploring strategic alternatives. 
Telephone and Data Systems (NYSE:TDS), which owns about 80% of US Cellular, said that its board and the board of USM decided to initiate a strategic review for USM, according to a statement on Friday. TDS skyrocketed 88% on the news.
TDS has retained Citi as its financial advisor and has retained legal counsel in connection with the review of strategic alternatives for US Cellular. In connection with the review, the US cellular independent directors, as authorized by the USM board, have retained a financial advisor and legal counsel.
The news sparked an upgrade for Telephone and Data Systems (TDS) to buy from neutral Citi. Citi's Michael Rollins also raised his price target for TDS to $16 from $8 and for USM to $29 from $26.
"While the review could conclude to stay the course and status quo, we view the announcement as a significant opportunity for the company to consider a range of options from selling US Cellular to a single buyer ..." Rollins wrote in a note Friday.
Rollins said USM could also sell portions of its assets to one or more buyers, or consider the sale of non-core assets such as towers and its wireless investments. He believes that all of the national carriers, including AT&T (T), Verizon (VZ), T-Mobile US (TMUS), and Dish (DISH), could have an interest in varying portions of USM assets. 
US Cellular (USM) reported Q2 results on Friday, as did TDS.
"We think the review is the right way forward, although market conditions are less favorable for executiving transactions than they once were," Morgan Stanley analyst Simon Flannery, who has an equal-weight and $27 price target on USM, wrote in a note on Friday. "We have long felt that there is hidden value within the US Cellular business, particularly their portfolio of 4k+ Towers, as well as minority stakes in several wireless markets operated by Verizon and AT&T, including the LA partnership."
Flannery points out that wireless consolidation may be challenging given antit-trust considerations.
The strategic review comes after investor Mario Gabelli said in June he's considering nominating directors for Telephone and Data (TDS) board at its next shareholder meeting. Gabelli's letter to TDS comes after he's unsuccessfully tried to convince the Carlson family, which controls U.S. Cellular (USM). to sell in the past. 
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