SAN ANTONIO, Tex. – AT&T Inc. (which was SBC until a 2005 re-brand) announced today it is merging with BellSouth Corp.
The move "will create a more effective and efficient provider in the wireless, broadband, video, voice and data markets," says today’s press release.
The merger will streamline the ownership and operations of Cingular Wireless, which is jointly owned by AT&T and BellSouth. "The new company will be more innovative, nimble and efficient, providing benefits to customers by combining the Cingular, BellSouth and AT&T networks into a single fully integrated wireless and wireline Internet protocol network offering a full range of advanced solutions," adds the release.
"This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth," said AT&T chairman and CEO Edward E. Whitacre Jr. "It will benefit customers through new services and expanded service capabilities. It will strengthen Cingular through unified ownership and a single brand. And we are confident that this is a merger we can execute, based on our track record with previous integrations and our experience working closely with BellSouth to create and build Cingular Wireless, and operate Yellowpages.com.
"This transaction combines two solid, very well-run companies," Whitacre added. "BellSouth operates in an attractive region with a growing economy. It has great employees and an outstanding network, with fiber optics deeply deployed in its service area. It has a strong record in terms of customer service and a sound, conservative balance sheet. These strengths, added to those of AT&T, will improve our ability to provide innovative services to more customers while returning substantial value to our owners and improving our growth profile."
"Technology changes and convergence are shaping a new competitive dynamic and creating tremendous opportunity," said Duane Ackerman, chairman and CEO of BellSouth, in the release. "We’re creating a company with much better capabilities to seize these opportunities while maintaining its strong focus on customer service and community involvement.
"This was the right time for this merger," said Ackerman. "This combination is good for our employees, our customers and our stockholders."
The "substantial financial benefits for stockholders of both companies," includes an expected net present value of US$18 billion in synergies resulting from a more than US$2 billion annual run rate in synergies expected in 2008, growing to US$3 billion in 2010
Consumers seeking a real alternative to cable monopolies should see faster and more economical deployment of next-generation IP television networks and similar services as a result of AT&T’s groundbreaking entry into IPTV and the unparalleled research and development work at AT&T Labs, coupled with BellSouth’s extensive deployment of fiber networks for DSL and other broadband services, adds the release.
Under terms of the agreement, approved by the boards of directors of both companies, shareholders of BellSouth will receive 1.325 shares of AT&T common stock for each common share of BellSouth. Based on AT&T’s closing stock price on March 3, 2006, this exchange ratio equals US$37.09 per BellSouth common share. This represents a 17.9% premium over BellSouth’s closing stock price on March 3, 2006, and a total equity consideration currently valued at approximately $67 billion.
The merger, which is subject to approval by shareholders of both companies, as well as regulatory authorities and to other customary closing conditions, is expected to close within approximately 12 months.
Whitacre will serve as chairman, CEO and a member of the board of directors of the combined company. Ackerman will serve as chairman and CEO of BellSouth operations for a transition period following the merger. Additionally, three members of BellSouth’s board of directors will join the AT&T board.
The corporate headquarters for the combined company will remain in San Antonio. Cingular’s headquarters will remain in Atlanta, as will the combined company’s Southeast regional telephone company headquarters.
