Merger of Ma Bell with its offspring will create world's biggest telecoms company
AT&T board accepts SBC's $16bn bid
February 1, 2005
By Maxim Kniazkov
Washington - SBC Communications had signed a deal to acquire its former parent, AT&T, as part of a $16 billion (R95 billion) deal that would create the largest US telecommunications giant, the companies said yesterday.
The agreement sounds the death knell for AT&T, a cultural and business icon that has been in business for 130 years and whose stock was once seen as the US's gold standard.
AT&T shareholders will get 0.77942 SBC shares for each AT&T share they own. Based on SBC's closing price on Friday, this works out at $18.41 per share.
In addition, AT&T will pay its shareholders a special dividend equalling $1.30 a share.
"Today's agreement is a huge step forward in our efforts to build a company that will lead an American communications revolution in the 21st century," said Edward Whitacre, SBC's chairman and chief executive.
David Dorman, the chairman and chief executive of AT&T, echoed the sentiment, saying that by combining their assets, the two companies would become "a stronger US-based global competitor capable of delivering the advanced network technologies necessary to offer integrated, high-quality and competitively priced communications services to meet the evolving needs of customers worldwide".
The announcement followed approval by the boards of directors of both companies.
However, it still requires approval by AT&T shareholders and US regulators. Because of that, officials pointed out that the takeover was expected to be finalised only by the first half of 2006.
Both companies have significant assets they believed would allow the new conglomerate to gain what officials described as "unmatched global reach".
San Antonio-based SBC, one of the so-called Baby Bell companies created in the break-up of Ma Bell (AT&T) 20 years ago, operates the second-largest local telephone network in the US, stretching from the Midwest into Texas and on to the west coast. It has control over 52 million access lines.
It is a leading player in high-speed broadband connections, with 5.1 million digital internet lines and a local broadband network covering 77 percent of its local customer locations.
In addition, SBC owns 60 percent of Cingular Wireless, a cellular service provider with 49 million subscribers nationwide.
AT&T for its part has one of the world's most advanced communications networks, spanning more than 50 countries. It serves virtually every member of the Fortune 1000 list of companies.
Although it has become significantly smaller over recent years, company officials said AT&T still controlled a network of research laboratories that had secured more than 5 600 global patents.
"We will renew America's leadership in communications technology with products and services that set the standard for how businesses and individuals communicate," Whitacre said.
The merger of AT&T into its former offspring marks the end of an era in the US telecoms sector.
The New Jersey-based corporation has been experiencing steady decline since 1984 when the federal government defined it as a monopoly and ordered its break-up into seven local service providers and one long-distance carrier.
Saddled with growing debt, it has been shedding assets, such as equipment makers NCR and Lucent Technologies in 1996, and AT&T Wireless, which was recently sold to Cingular.
Experts believe the takeover is likely to bring about a realignment in the US telecoms industry by forcing companies such as MCI, Sprint, Verizon and BellSouth to seek alliances of their own to answer SBC's challenge.
Some expect Verizon, the largest of the Bell sisters, will now try to merge with MCI.
|
|
